NEW YORK--(BUSINESS WIRE)--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.
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