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Article

Weekly Market Outlook: May's High-Yield Bond Offerings Plunge as New Loan Programs Soar

May 2018's 52% year-to-year plunge by US$-denominated high-yield bond issuance to $20.96 billion grossly understated the overall pace of borrowing by high-yield companies. In stark contrast, May 2018's newly-rated bank loan programs graded Baa or lower soared higher by 52% from a year earlier to a record $104.64 billion. The latter surpassed January 2017's former zenith of $91.42 billion and was well above November 2007's $81.80 billion high of 2002-2007's business cycle upturn. By December 2007, the Great Recession was officially under way.

June 2018 Pdf John Lonski, Njundu Sanneh, Franklin Kim, Yukyung Choi, Ryan Sweet, Reka Sulyok, Katrina Ell
Presentation

Dr. Kohl: Ag Trends and Borrower Behaviors

Dr. Kohl: Ag Trends and Borrower Behaviors

June 2018 Pdf Doug Johnson, David Kohl
Webinar-on-Demand

Dr. Kohl: Ag Trends and Borrower Behaviors

Moody's Analytics hosted special guest presenter and agricultural economic expert, Dr. David Kohl, for a special session on the outlook of ag lending in 2018.

June 2018 WebPage Doug Johnson, David Kohl
Whitepaper

Cloud-Based Credit Origination Solutions are Not all the Same

There are many benefits to using cloud-based technology including faster deployments and reduced cost of ownership. Modernizing your credit origination system and process is critical to keeping up with increased consumer demand for efficiency and convenience. With an ever-growing number of SaaS credit origination solutions popping up, how do you know which technology and which provider is right for you?

June 2018 Pdf Jill Coppersmith, Anju Govil

Cloud-Based Credit Origination Solutions are Not all the Same

There are many benefits to using cloud-based technology including faster deployments and reduced cost of ownership. With an ever-growing number of SaaS credit origination solutions popping up, how do you know which technology and which provider is right for you?

June 12, 2018 WebPage Jill Coppersmith, Anju Govil
Article

Weekly Market Outlook: Economic Growth Slows as Ratio of Debt to GDP Climbs Ever Higher

Perhaps the speed at which GDP grows relative to debt matters more than the ratio of debt to GDP. The faster GDP grows relative to debt, the lower might be the risks surrounding the repayment of debt obligations. Expressed differently, the greater the return from debt capital, the lower should be the incidence of delinquencies, charge offs, and defaults. When productively employed, debt capital can more than pay for itself. The U.S.' ratio of private and public nonfinancial-sector debt has soared from 1968's 131% to 2017's 253% of 2017. Nevertheless, the 10-year average annualized growth of U.S. real GDP decelerated from the 4.9% of the span-ended 1968 to the 1.4% of the span-ended 2017.

June 2018 Pdf John Lonski, Njundu Sanneh, Yukyung Choi, Ryan Sweet, Barbara Teixeira Araujo, Katrina Ell, Veasna Kong, Faraz Syed, Martin Janicko
Article

Weekly Market Outlook: Fewer Defaults Strongly Favor a Higher Equity Market

Notwithstanding the occasional jarring setback, the market value of U.S. common stock need only rise by 4.8% in order to return to its record high of January 26, 2018. Such a recovery appears to be well within reach if profits grow. Moreover, the realization of the projected decline by the U.S.' high-yield default rate from April 2018's 3.7% to 1.5% by April 2019 implies a firming of corporate finances that can only facilitate a recovery by share prices.

May 2018 Pdf John Lonski, Franklin Kim, Yukyung Choi, Ryan Sweet, Kathryn Asher, Michael Ferlez, Barbara Teixeira Araujo, Katrina Ell, Alaistair Chan, Veasna Kong, Faraz Syed
Article

Weekly Market Outlook: Higher Interest Rates Will Be the Source of Their Own Demise

The remedy of higher interest rates is taking effect. The risk of an overheating of financial markets and business activity appears to be waning. The market value of U.S. common stock has been unable to return to its record high of January 26 ever since the 10-year Treasury yield has risen from its 2.56% average of 2018's first 36 days to 2.88% since then. In turn, the S&P 500's forward-looking price-to-earnings ratio has eased from January 26's 18.7:1 to a recent 17.1:1. Not only will a less exuberant equity market rein-in wealth-driven spending by consumers, it will also curb business expenditures by containing the market valuation of business assets and increasing the cost of equity capital. Moreover, a less vibrant equity market may prompt creditors to demand additional compensation for default risk when lending to businesses.

May 2018 Pdf John Lonski, Franklin Kim, Yukyung Choi, Ryan Sweet, Kathryn Asher, Michael Ferlez, Barbara Teixeira Araujo, Katrina Ell
Webinar-on-Demand

New Generation of Credit Decisioning

Increasing demand for credit has opened up the marketplace to a host of new tech-savvy lending providers. To compete in this new landscape, banks are changing their approach to credit management in order to provide faster and more convenient service to their clients.

May 2018 WebPage Nelson Almeida, Dr. Jamie Stark
Presentation

New Generation of Credit Decisioning

Banks need to adopt new technology for quicker decisioning without sacrificing any of the risk assessment and analysis. At Moody's Analytics, we're helping our clients meet this challenge by investing in the latest data trends and technology advancements and implementing them into our solutions.

May 2018 Pdf Nelson Almeida, Dr. Jamie Stark
Article

Weekly Market Outlook: Low Utilization Rate Favors Profits Growth and Fewer Defaults

Markets are now torn between upbeat outlooks for corporate earnings and the risks posed to these outlooks by a very low jobless rate. A recent consensus forecast has S&P 500 operating income growing by 22% in 2018 and by 11% in 2019. Moreover, the Blue Chip consensus believes that the pretax operating profits of all U.S. corporations will increase by 5.2% in 2018 and 4.4% in 2019. In addition, an expected drop by the U.S.' high-yield default rate from April 2018's 3.7% to 1.5% by April 2019 complements the positive outlook for profits. Nevertheless, April's historically low unemployment rate of 3.9% hints of limited upsides for both domestic spending and U.S. output that may thwart expectations of operating earnings growth and fewer defaults.

May 2018 Pdf Barbara Teixeira Araujo, Yukyung Choi, Katrina Ell, Franklin Kim, John Lonski, Njundu Sanneh, Ryan Sweet, Reka Sulyok
Article

Weekly Market Outlook: Equities Giveth and Taketh Away from Credit Quality

The net equity buybacks of U.S. nonfinancial corporations fell from 2016's $581 billion to 2017's $391 billion possibly in response to the historically rich valuation of U.S. common stock. Indications are that first-quarter 2018's net stock buybacks were up considerably from 2017's final quarter mostly in response to the volatility that followed the setting of the now record high for the market value of U.S. common stock on January 26, 2018.

May 2018 Pdf Yukyung Choi, Katrina Ell, Franklin Kim, John Lonski, Ryan Sweet, Reka Sulyok, Njundu Sanneh
Whitepaper

Navigating uncertainty through enhanced business insight

In this paper Brian Robinson discusses the challenges and way forward for a common projection capability which supports simplified processes, and delivers consistent business insight across functions, and the entire business.

May 2018 Pdf Brian Robinson
Article

Weekly Market Outlook: M&A Both Enhances and Diminishes Corporate Credit Quality

Mergers, acquisitions and divestitures (M&A) wield considerable influence over corporate credit quality, where M&A's impact on a single company's credit standing can vary over time. For example, a credit rating may be downgraded early on because of the substantial increase in leverage brought on by a debt-financed acquisition. However, over time, the acquisition may help to boost profitability, liquidity and the company's market value by enough to eventually prompt a credit rating upgrade.

May 2018 Pdf John Lonski, Franklin Kim, Yukyung Choi, Njundu Sanneh, Ryan Sweet, Barbara Teixeira Araujo, Katrina Ell, Alaistair Chan
Article

Weekly Market Outlook: Loan Default Rate May Approach Bond Default Rate

The high-yield bond market continues to shrug off equity market volatility. Notwithstanding a climb by the VIX index's month-long average from December 2017's 10.3 points to April-to-date's 18.6 points, as well as a rise by the U.S.' high-yield default rate from January 2018's 3.3% to March's 3.9%, April 25's composite high-yield bond spread of 352 basis points was thinner than the 359 bp of year-end 2017. Still, thin spreads reflect strongly held expectations of a renewed slide by the high-yield default rate well into 2019.

April 2018 Pdf John Lonski, Franklin Kim, Yukyung Choi, Njundu Sanneh, Ryan Sweet, Barbara Teixeira Araujo, Katrina Ell
Webinar-on-Demand

Ag Lending – Experience of Living Through the Cycles

Moody's Analytics hosted special guest panelists Sam Miller from BMO Harris and Steve Ausdemore from Citizens State Bank for a discussion on what you can expect and prepare for in upcoming economic cycles.

April 2018 WebPage Doug Johnson
Presentation

Ag Lending – Experience of Living Through the Cycles

Doug Johnson fro Moody's Analytics hosted special guest panelists Sam Miller from BMO Harris and Steve Ausdemore from Citizens State Bank for a discussion on what you can expect and prepare for in upcoming economic cycles.

April 2018 Pdf Doug Johnson
Presentation

CECL: Adapting to Adopt

Our subject matter experts, Chris Henkel, Senior Director, and Anna Krayn, Senior Director, discuss critical steps in meeting the new CECL standard.

April 2018 Pdf Christian Henkel, Anna Krayn
Webinar-on-Demand

CECL: Adapting to Adopt

Our subject matter experts, Chris Henkel, Senior Director, and Anna Krayn, Senior Director, discuss critical steps in meeting the new CECL standard.

April 2018 WebPage Christian Henkel, Anna Krayn
Presentation

Applications of Alternative Data in Credit Decisioning

In this webinar, a panel of research and data scientist experts across Moody's Analytics discuss social data in probability of default modeling, closed and open data for location scoring, and text analytics for credit risk.

April 2018 Pdf Eric Bao, Irina Korablev, Rama Sankisa, Dr. Janet Zhao
Webinar-on-Demand

Applications of Alternative Data in Credit Decisioning

With an immense amount of available data generated worldwide within the last two years, the next evolution of banking analytics will include information from a variety of open and closed sources.

April 2018 WebPage Eric Bao, Irina Korablev, Rama Sankisa, Dr. Janet Zhao
Article

Weekly Market Outlook: Debt-to-Profits Outperforms Debt-to-GDP

In 2017's final quarter, the 7.7% yearly advance by nonfinancial-corporate profits from current production outran the accompanying 6.6% increase of nonfinancial-corporate debt. The record shows that if pretax operating profits continue to outpace corporate debt, corporate credit quality will improve. The correlation between the high-yield default rate's quarter-long average and the yearlong ratio of debt-tooperating profits for US nonfinancial corporations is a meaningful 0.82.

March 2018 Pdf John Lonski, Franklin Kim, Yukyung Choi, Ryan Sweet, Kathryn Asher, Michael Ferlez, Thomas Nichols, Barbara Teixeira Araujo, Katrina Ell
FAQ

CECL Modelling FAQs

The FASB's current expected credit loss (CECL) standard requires timely, forward-looking measurement of lifetime risk using credible models. Moody's Analytics answers leading questions from your peers related to modeling challenges for CECL implementation.

March 2018 Pdf
FAQ

CECL Forecasts and Economic Scenarios FAQs

FASB's current expected credit loss (CECL) standard requires timely, forward-looking measurement of lifetime risk using "reasonable and supportable" forecasts. Moody's Analytics answers leading questions from your peers related to the forward-looking elements of CECL implementation.

March 2018 Pdf
FAQ

CECL Data FAQs

The FASB's current expected credit loss (CECL) standard requires a significant amount of historical data for forward-looking measurement of lifetime risk. Moody's Analytics answers leading questions from your peers related to data challenges for CECL implementation.

March 2018 Pdf
Article

Weekly Market Outlook: Foreign Investors Ease Burden of U.S.' Elevated Leverage

Perceived economic and political risks drove share prices sharply lower on March 22. Markets are beginning to ask whether companies will be capable of passing on higher costs to the U.S.' less than financially robust middle class. The U.S.' still relatively low personal savings rate questions how easily consumers will absorb recent and any forthcoming price hikes. Moreover, the recent slide by Moody's industrial metals price index amid dollar exchange rate weakness hints of a leveling off of global business activity.

March 2018 Pdf John Lonski, Njundu Sanneh, Franklin Kim, Yukyung Choi, Ryan Sweet, Barbara Teixeira Araujo, Reka Sulyok, Katrina Ell
Article

Weekly Market Outlook: Default Rate Defies Record Ratio of Corporate Debt to GDP

Never before have the high-yield bond spread and default rate been so low amid a new record high ratio of U.S. corporate debt to GDP. In terms of a moving yearlong average, U.S. nonfinancial-corporate debt finished 2017 at an unprecedented 45.4% of U.S. nominal GDP. Nevertheless, not only was the U.S.' high-yield default rate of Q4-2017 at a below-trend 3.3%, but the accompanying average high-yield bond spread of 363 basis points reflected expectations of an even lower default rate nine to twelve months hence. Moody's Default Research Group expects the default rate to approximate 2% during early 2019.

March 2018 Pdf John Lonski, Njundu Sanneh, Franklin Kim, Yukyung Choi, Ryan Sweet, Barbara Teixeira Araujo, Reka Sulyok, Katrina Ell, Faraz Syed
Article

Weekly Market Outlook: Internal Funds Outrun Corporate Debt by Widest Margin Since 2011

Lately, financial markets have grudgingly withstood the broad imposition of tariffs on steel and aluminum. Not even the resignation of the highly respected Gary Cohn was capable of triggering a jarring sell-off of equities. Markets took some comfort from President Trump's indication that countries might be granted exemptions from the tariffs if they resolve issues that led to the imposition of tariffs.

March 2018 Pdf John Lonski, Njundu Sanneh, Franklin Kim, Yukyung Choi, Ryan Sweet, Barbara Teixeira Araujo, Anna Zabrodzka, Katrina Ell
Article

Weekly Market Outlook: Tariffs Warn of Even Faster Price Inflation and Slower Growth

February was a stormy month for financial markets. Worse yet, March got off to a horrible start in response to President Trump's intention to impose import tariffs of 10% on aluminum and 25% on steel despite how costlier aluminum and steel will diminish the global competitiveness of those U.S. manufacturers using these materials. Remember, after having incurred back-to-back monthly setbacks in January and February, auto sales were expected to decline in 2018 prior to the statement on tariffs.

March 2018 Pdf John Lonski, Njundu Sanneh, Franklin Kim, Yukyung Choi, Ryan Sweet, Barbara Teixeira Araujo, Reka Sulyok, Katrina Ell, Veasna Kong
FAQ

The Transition to CECL: Survey Results

In 2017, Moody's Analytics surveyed U.S. firms on their prepardness for CECL. We asked questions from gap analysis, data gathering, model and methodology selection, reasonable and supportable forecasts, to workflow automation. Read more to hear what your peer firms have to say about their current efforts and ability to meet the new CECL standard.

February 2018 Pdf
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