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  • Moody’s Expects Tesla To Stay At EV Leader Spot, Upgrades To ‘Ba1’

    Moody’s Expects Tesla To Stay At EV Leader Spot, Upgrades To ‘Ba1’

    Moody’s upgraded Tesla Inc’s debt rating by two notches to “Ba1” from “Ba3” on Monday, reflecting the ratings agency’s expectations that the Elon Musk-led company will maintain its position as the leading battery electric vehicle manufacturer. Moody’s affirmed in a note that Tesla’s outlook remains positive and the company will continue to increase its scale rapidly and improve its profitability notably.

    Tesla’s financial policy is likely to be prudent and liquidity would remain very good, Moody’s said, adding that a more competitive offering of battery electric vehicles by other automakers could start to exert some pressure on the company’s margins in 2023.

    In January, Tesla reported record quarterly deliveries that far exceeded Wall Street estimates, riding out global chip shortages as it ramped up China production. It was the sixth consecutive quarter that the world’s most valuable automaker posted record deliveries.

    The ratings agency also anticipated that Tesla will deliver nearly 1.4 million vehicles in 2022, up from about 936,000 in 2021.

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  • Moody’s Economist Joins Citi Australia

    Moody’s Economist Joins Citi Australia

    The bank is expanding its local research team as it hopes to strengthen its research insights and provide tailored insights on the implications for Australia.

    Citi Australia is bolstering its research capabilities with the addition of Faraz Syed, the bank announced in a statement on Wednesday.

    Syed joins from Moody’s Analytics, where he was an economist responsible for producing thematic analysis on domestic macroeconomic issues, and country forecasts for Australia, Japan and India, and led research on the Australian housing market. He was previously a research economist at the Australian Bureau of Agricultural Resources, Economics and Sciences.

    In his new role, Syed will report to Citi Australia chief economist Josh Williamson. In the announcement, Citi noted growing demand among clients for deeper insights into key macro-economic influences, as well as its Equity Research function, which has more than 160 ASX-listed stocks under coverage.

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  • Moody’s backs Vietnam’s strict proposal on unsecured consumer lending

    Moody’s backs Vietnam’s strict proposal on unsecured consumer lending

    The State Bank of Vietnam has proposed changes to regulations on personal unsecured lending by consumer finance companies. The proposed changes include limiting unsecured personal loans in cash to existing customers with good credit and no overdue debt; and limiting the maximum amount of such cash loans to 30 percent of total loans.

    The central bank has not specified when it intends to carry out the new regulations.

    According to Moody’s, the proposal is credit positive for Vietnamese finance companies because the stricter regulations will help alleviate asset quality pressure by curbing excessive growth in the riskier consumer-loan segment, which will lead to stronger risk-adjusted returns and will support internal capital generation in the future.

    The rating agency also said that the bottom-line profitability of finance companies was expected to decrease in 2019 as companies adjust to the new rules.

    VPBank Finance Co Ltd (FE Credit) has the highest proportion of personal loans in its loan portfolio among the three largest finance companies by total loans in Viet Nam. The other two companies are Home Credit Vietnam Finance Co Ltd (Home Credit) and HD Saison Finance Co Ltd

    All three companies will need to make adjustments to their businesses by focusing on lower-yield products such as consumer durables and motor vehicle loans. Moody’s expects that FE Credit will need to make the most significant adjustments to comply with stricter regulations because of the higher amount of personal loans on its books.

    The three companies are also market leaders in other consumer finance segments in Viet Nam and will have to make fewer adjustments to their business practices than smaller finance companies as a result of the new regulations.

    These smaller companies have been more reliant on personal loans for business growth and will have greater pressure on their revenue than the top three companies.

    Revenue growth of finance companies remains supported by strong consumer demand for credit, while credit costs will be contained by the tighter lending requirement. Both factors will drive stronger risk-adjusted returns for finance companies, according to Moody’s.

    Vietnam’s consumer finance industry grew at a compound annual rate of 41 percent between 2013 and 2017 on the back of higher personal income and greater penetration of services.

    Moody’s expects growth in personal loans to slow significantly when the new regulations come into effect, after far exceeding growth over the past three years for other less-risky consumer loans, such as those for the purchase of motorcycles and durables.

    The demand for consumer finance is strong and supported by the buoyant Vietnamese economy.

    Now, finance companies constrained from extending new personal unsecured loans because of the new regulations will focus on growing other product segments and will benefit from increased diversification in their lending portfolios and more emphasis on lower-risk products.

  • Moody’s continues to review for downgrade ratings of Standard Chartered Bank Korea

    Moody’s continues to review for downgrade ratings of Standard Chartered Bank Korea

    Moody’s expects to conclude the review in March 2016, after incorporating SCB’s efforts to turn around SCBK’s performance, as well as the detailed results of SCBK’s parent, Standard Chartered Bank’s (SCB, FC deposits Aa2 rating under review for downgrade, BCA a2 rating under review for downgrade) performance for 2015.

    These results will be available in late February.

    Moody’s had originally placed the long-term ratings of SCBK on review on 9 November 2015. Please refer to “Moody’s reviews for downgrade Standard Chartered Bank Korea’s ratings” published on 9 November 2015.

    Moody’s notes that SCB is restructuring its poorly performing Korean retail and commercial banking businesses, introducing some uncertainty as to the future of SCBK’s operations.

    The ratings review of SCBK will consider whether: (1) these initiatives have the potential to change SCBK’s stand-alone credit profile, as expressed by its BCA; and/or (2) to change the strategic importance of SCBK to SCB and therefore potentially to affect the strength of support from SCB.

    The following ratings are on review for downgrade:

    – Local- and foreign-currency long-term deposit ratings of A1

    – Foreign currency senior unsecured MTN rating of (P)A1

    – Local- and foreign-currency short-term deposit ratings of P-1

    – Foreign currency commercial paper and other short-term ratings of P-1/(P)P-1

    – Long-term and short-term counterparty risk assessment of A1(cr) and P-1(cr)

    – BCA of baa2, and adjusted BCA of a3

    The principal methodology used in these ratings/analysis was Banks published in January 2016. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

    SCBK is headquartered in Seoul, with total assets of KRW61.7 trillion or USD54 billion as of June 2015.

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