Fitch: Inside Credit: Growth Risks for Emerging Market Banks & Eurozone Corporate Bonds

NEW YORK--()--Growth risks headline this week's edition of Fitch Ratings' Inside Credit for both emerging market banks and Eurozone corporate bond issuance. Weak growth and the prospect of deflation in the eurozone point to increased mergers and acquisitions (M&A) for corporates in the region, while emerging markets banks should be able to offset challenges posed by slower growth and other challenges due to solid buffers and state support.

'Although the current environment in the eurozone leaves corporates with few options for growth outside of mergers and acquisitions, issuance should remain strong next year amid record-low yields,' said Michael Larsson, Director, Credit Market Research. 'In addition, European high yield issuance is set for another record year, as volume in the first 10 months of 2014 has already outpaced 2013 level by 6%.'

Separately, banks in emerging markets faced increasing challenges this year due to slower economic growth, higher interest rates, seasoning loan books and, in some cases, greater political uncertainty.

'While we expect these challenges to persist in 2015, bank credit metrics and ratings should be mostly resilient,' says James Watson, Managing Director, Emerging Europe Banks. 'For banks' stand-alone profiles, risks are greatest in China, but have also risen in Brazil and Russia.'

Other topics covered in this week's edition of Inside Credit include:

--Limitations in global infrastructure investment;

--Payment increases for U.S. mortgage borrowers;

--Pricing concerns for Chinese Bank AT1/T2 Investors;

--Increased Insurance M&A in Europe;

--Macroeconomic challenges for Brazil's largest public banks;

--Increased leveraged loan default rates due to amend and extend rules;

--The impact of China's bankruptcy law.

'Inside Credit' is a weekly snapshot of Fitch Ratings' noteworthy content, selected from all sectors and regions. To receive the weekly edition, distributed every Friday at 8am ET, please sign up here:

http://pages.fitchemail.fitchratings.com/InsideCreditSignUp/

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Media Relations
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Media Relations
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com