MOODYS.COM

3 DECEMBER 2015

NEWS & ANALYSIS Corporates 2 » China Mobile's Acquisition of TieTong Is Credit Positive » Mobilink's Merger with Warid Will Increase Scale and

Service Offering » China Metallurgical Group's Sale of Linjiang Yujing Is

Credit Positive

Infrastructure 7 » Regulator's Decision on Future Test Year Is Credit Positive for

New Mexico Utilities » NextEra Energy's Sale of Two Texas Power Plants Is

Credit Positive » Edison S.p.A. Wins Credit-Positive Court Ruling on Libyan Gas

Banks 11 » ECB's Data Shows Italian Banks' Capital Buffers Improved » EBRD Subscribes to a Capital Increase for Raiffeisen Bank

International's Ukrainian Subsidiary, a Credit Positive » Existing Creditors and New Equity Investors Contribute to

Eurobank's Recapitalisation, Benefiting Security Holdouts » Russian Retail Sales Contract Sharply, a Credit Negative for

Banks Lending to the Sector » Revised Romanian Covered Bond Law Is Credit Positive

for Banks » Increased Corporate Leverage Threatens Singapore Banks'

Asset Quality

Sovereigns 23 » Zambia Begins Construction of Major Hydro-Power Project, a

Credit Positive

RECENTLY IN CREDIT OUTLOOK

» Articles in Last Monday’s Credit Outlook 24 » Go to Last Monday’s Credit Outlook

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NEWS & ANALYSIS Credit implications of current events

2 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Corporates

China Mobile’s Acquisition of TieTong Is Credit Positive Last Friday, China Mobile Limited (CML, Aa3 stable) announced that it would acquire TieTong for around RMB32 billion, subject to the final price not increasing more than RMB1 billion, and the assumption of RMB2.34 billion in net debt. TieTong is currently owned by China Mobile Communications Corporation (CMCC, unrated), which has a 73% stake in CML and is itself owned by China’s state-owned Assets Supervision and Administration Commission. The transaction, which the companies expect to complete by year end, will improve CML’s competitive position and is credit positive.

The acquisition will help CML become a fully integrated fixed-mobile operator, offering subscribers services that operate on both fixed wireline networks and mobile/cellular networks. The acquisition will improve CML’s competitiveness against China Telecom (CT, unrated) and China Unicom (CU, unrated), both of which already have a sizable fixed-line presence. CML can leverage TieTong’s fixed-line infrastructure by integrating it with its own market-leading 4G network.

At the same time, the deal size is modest and can be readily absorbed given CML’s significant cash and deposit holdings of RMB456 billion as of 30 June 2015. In 2014, TieTong generated RMB23.3 billion in revenue, or 4% of CML’s 2014 total revenue, and RMB7.0 billion in reported EBITDA, compared with CML’s Moody’s-adjusted EBITDA of RMB271.5 billion. TieTong had net assets of RMB30 billion at the end of May 2015, compared with CML’s RMB895 billion at 30 June 2015. We do not expect the acquisition to have a material effect on CML’s adjusted debt/EBITDA ratio, which was 0.2x in 2014.

TieTong operates fixed-line telecommunications and is much smaller than some of its competitors. According to company data, TieTong had 12 million fixed-broadband and 18 million fixed-line customers as of September 2015, compared with CT’s 111 million fixed-broadband and 137 million fixed-line customers and CU’s 72 million fixed-broadband and 77 million fixed-line customers. However, TieTong has an extensive nationwide backbone network, metro fiber, Internet protocol version 4 addresses, real property interests and land assets, and branches in all 31 provinces, autonomous regions and directly administered municipalities in China.

TieTong’s fixed-line assets will complement CML’s own mobile network, increasing CML’s overall network capacity coverage and efficiency. For instance, China has an extensive railroad system through some areas that may not be well covered by wireless signals. With TieTong’s last-mile network, CML will be able to improve and broaden 4G coverage in those areas. Similarly, TieTong’s nationwide fiber network serving corporate customers will help strengthen CML’s indoor coverage in commercial buildings.

Moreover, the acquisition will better position CML to provide fixed-mobile bundled services which can improve customer loyalty and revenue and reduce churn rates. By obtaining TieTong’s fixed broadband license, CML will also benefit from growth opportunities in the fixed broadband market, and in the smart home and Internet-of-things sectors.

Gloria Tsuen Vice President - Senior Analyst +852.3758.1583 gloria.tsuen@moodys.com

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

NEWS & ANALYSIS Credit implications of current events

3 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Mobilink’s Merger with Warid Will Increase Scale and Service Offering On 26 November, VimpelCom Ltd. (Ba3 stable) announced that subsidiary Pakistan Mobile Communications Limited (Mobilink, B1 stable), the nation’s largest mobile telecommunications operator by number of subscribers, would merge with privately held Warid Telecom Limited (unrated), the nation’s fifth-largest operator. The merger will be structured as a share swap, whereby Mobilink will obtain a 100% stake in Warid, and Warid’s shareholder, the Dhabi Group (unrated), will obtain approximately a 15% stake in Mobilink.

Although leverage will rise, the merger is credit positive for Mobilink because it will strengthen its leading market position in Pakistan’s competitive mobile telecommunications market, and enhance its network quality and coverage.

Pro forma for the merger, Mobilink’s revenue would increase to $1.4 billion from $1.0 billion for the 12 months that ended September 2015. Mobilink’s subscriber market share would also increase to about 38% from 29% as of September 2015, well ahead of Pakistan’s second-largest operator, Telenor Pakistan (unrated), which has a 27% market share (see Exhibit 1).

EXHIBIT 1

Pakistan Mobile Subscriber Market Share as of September 2015

Source: Pakistan Telecommunication Authority

The merger will enhance Mobilink’s service quality and expand its network coverage through access to Warid’s telecommunications network. As shown in Exhibits 2 and 3, Mobilink’s total telecommunication towers will increase to about 10,000 from 8,000, and its high-speed base stations (equipment that transmits wireless telecommunication voice and data) will increase to 4,600 from 3,600, covering both 3G and 4G services.

Mobilink29%

Telenor27%

Zong19%

Ufone16%

Warid9%

Maisam Hasnain Associate Analyst +852.3758.1420 maisam.hasnain@moodys.com

Gloria Tsuen Vice President - Senior Analyst +852.3758.1583 gloria.tsuen@moodys.com

Annalisa Di Chiara Vice President - Senior Credit Officer +852.3758.8517 annalisa.dichiara@moodys.com

NEWS & ANALYSIS Credit implications of current events

4 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EXHIBIT 2

Mobilink's Telecommunication Towers Post Merger

Note: The post-merger tower count excludes towers to be decommissioned because of overlapping coverage between Mobilink and Warid in certain areas. Source: VimpelCom

EXHIBIT 3

Mobilink's High-Speed Base Stations Post Merger

Source: VimpelCom

Mobilink expects the merger to be completed in six months, pending approvals from the Competition Commission of Pakistan, State Bank of Pakistan, Securities and Exchange Commission of Pakistan, and Pakistan Telecommunication Authority.

Assuming the regulators do not require Mobilink to return a portion of Warid’s spectrum, the merger will make Mobilink the largest spectrum holder in Pakistan with 37 megahertz (MHz) of spectrum, ahead of Zong (unrated), which has about 33.5 MHz of spectrum. The improved service offering and network coverage through its increased spectrum holdings will increase Mobilink’s opportunities for revenue growth in mobile data services.

Mobilink acquired 10 MHz of 3G spectrum for $300.9 million in the last spectrum auction in April 2014, but it has had no 4G spectrum. The merger with Warid allows Mobilink to extend its access to Warid’s 4G services, which offer faster speeds on mobile data, to Mobilink’s 35 million subscribers. In addition, Warid’s 10 million subscribers will also gain access to Mobilink’s 3G services.

Only limited financial information on Warid has been disclosed, but we expect Mobilink’s credit metrics to weaken following the merger, while remaining aligned with its B1 rating. As part of the merger, Mobilink will take on $470 million in net debt from Warid, which we estimate will increase Mobilink’s pro forma adjusted leverage (i.e., Moody’s-adjusted debt/EBITDA) to about 1.8x from 1.1x for the 12 months that ended September 2015 (see Exhibit 4). We also expect Mobilink to maintain strong access to borrowing from local banks to help address the refinancing risk associated with upcoming debt maturities.

Approx. 8

Approx. 9-10

Approx. 5

0

2

4

6

8

10

12

14

Mobilink Warid Mobilink post-merger

Thou

sand

s

3.6 3.6

1.0 1.0

0

1

2

3

4

5

Mobilink (3G) Warid (4G) Mobilink post-merger(3G + 4G)

Thou

sand

s

4G

3G

NEWS & ANALYSIS Credit implications of current events

5 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EXHIBIT 4

Mobilink’s Adjusted Debt/EBITDA

Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

However, incremental EBITDA from Warid, the potential for cost synergies through lower operating expenses for network maintenance costs and selling and lower general and administrative expenses will lead to a decline in Mobilink’s leverage over the next two to three years.

-

0.2x

0.4x

0.6x

0.8x

1.0x

1.2x

1.4x

1.6x

1.8x

2.0x

2011 2012 2013 2014 LTM Sept 2015 LTM Sept 2015 proforma for merger

NEWS & ANALYSIS Credit implications of current events

6 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

China Metallurgical Group’s Sale of Linjiang Yujing Is Credit Positive On Monday, Metallurgical Corporation of China Ltd. (MCC, unrated), a key subsidiary of Chinese engineering and construction company China Metallurgical Group Corporation (CMGC, Baa3 positive), announced that it would dispose of its 100% equity interest in Nanjing Linjiang Yujing Real Estate Development Co., Ltd. (Linjiang Yujing, unrated) for RMB3.37 billion. If the transaction goes ahead, MCC will record an investment gain of RMB206 million.

The sale is credit positive for CMGC, which had revenue of RMB225 billion for the 12 months that ended 30 June 2015, because it will help the state-owned company reduce its debt leverage and strengthen its balance sheet. Assuming that the company uses the entire proceeds to pay down debt, CMGC’s Moody’s-adjusted debt of RMB123 billion at the end of June 2015 will fall by 2.7%, and its adjusted debt/EBITDA will decrease pro forma by 0.18x to 6.28x from 6.46x.

We expect CMGC’s adjusted debt/EBITDA to trend toward 6.0x over the next 12-18 months as a result of deleveraging measures, our expectation that growth in its non-metallurgical infrastructure and real estate businesses will underpin mid-single-digit revenue growth, the company’s focus on profitable operations and cost controls driving stable margins, and modest capital expenditures.

In September 2010, MCC obtained land use rights to develop two tracts (Land 1 and Land 3) in the Xiaguan District of Nanjing City. Linjiang Yujing was established mainly to engage in the development of real estate, property management and real estate agency related to Land 1.

The large size of the Nanjing project has prompted MCC to focus on Land 3, and either attract other investors to help develop Land 1 or sell it through staggered equity listings to safeguard its return on investment in the project.

Chenyi Lu Vice President - Senior Analyst +852.3758.1353 chenyi.lu@moodys.com

NEWS & ANALYSIS Credit implications of current events

7 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Infrastructure

Regulator’s Decision on Future Test Year Is Credit Positive for New Mexico Utilities On Monday, the New Mexico Public Regulation Commission (NMPRC) unanimously voted to define a future test year (FTY) as beginning up to 13 months following a rate case application. The NMPRC’s decision is credit positive for the Public Service Company of New Mexico (PNM, Baa2 stable) and other state utilities because the FTY definition will improve a utility’s ability to recover its costs and investments in a more timely manner.

Since it takes about a year for regulators to decide a rate case proceeding, using an FTY allows utilities to include future investments when applying for new rates and receive contemporaneous cost recovery. Under the existing format, utilities are required to use a historical test year, which creates recovery lag or a longer time between the time a utility spends and recovers its capital.

Earlier this year, the NMPRC rejected PNM’s December 2014 rate case application on the recommendation of an independent hearing examiner. As part of the rejection, the regulators re-defined the FTY as beginning up to 45 days following a rate case application rather than a test period beginning more than a year in the future. In our view, the regulators’ FTY definition delayed the cost recovery of when a utility implements new rates compared with a typical future test period that begins more than a year out, which almost allows for simultaneous recovery of investments as they are made. PNM had to re-file its rate case application using the re-defined FTY, which it did on 27 August.

After PNM challenged the regulators’ FTY decision through an appeal filed in June with the New Mexico Supreme Court, the NMPRC conducted several workshops and determined that an FTY should begin up to 13 months after a rate case application. After remand of the appeal, the regulators issued a written order for the re-defined FTY on 30 November. Under the new FTY definition, PNM will be able to propose a 2018 test year in its next rate case application, likely at the end of 2016.

For the 12 months that ended 30 September 2015, PNM’s ratio of cash flow pre-working capital to debt was 20.1%, and cash flow pre-working capital interest coverage was 5.1x. Owing to delays in filing its current rate case application and the associated regulatory lag, we expect that PNM will continue to earn below its authorized return on equity. Over the next two years, we expect PNM’s ratio of cash flow pre-working capital to debt to be in the 16%-19% range and its cash flow pre-working capital interest coverage to be in the low-4x range. PNM is the principal operating utility of PNM Resources, Inc. (Baa3 stable).

Jeffrey Cassella Vice President - Senior Analyst +1.212.553.1665 jeffrey.cassella@moodys.com

NEWS & ANALYSIS Credit implications of current events

8 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

NextEra Energy’s Sale of Two Texas Power Plants Is Credit Positive Last Friday, NextEra Energy, Inc. (NEE, Baa1 stable) announced that it had agreed to sell its La Frontera Generation, LLC (B1 stable) portfolio of power plants for $1.59 billion to Luminant Holding Co. LLC, a subsidiary of Energy Future Holdings Corp. (unrated). The sale will lower NEE’s business risk by reducing its volatile merchant generation exposure and incrementally reducing its leverage, a credit positive.

The assets being sold consist of the 1,912-megawatt Forney Energy Center and the 1,076-megawatt Lamar Energy Center, both natural gas-fired facilities in Texas. The deal will consist of a purchase price of $1.313 billion, plus $239 million in balance sheet cash and $37 million for net working capital, according to Luminant. NEE plans to use the proceeds to retire approximately $950 million of existing project debt and the remaining proceeds of $450 million for reinvestment or managing its leverage, benefitting its financial profile.

In addition to the 3% reduction in NEE’s total debt, the sale also reduces its cash flow pre-working capital by 2%, causing a slight increase in its ratio of adjusted cash flow to debt to 19.6% from 19.4% as of the 12 months that ended 30 September 2015. The deal also decreases NEE’s non-utility generation capacity by 15%, but more importantly, it reduces its merchant generation capacity by roughly 45% from 2014 in addition to the 23% already reduced between 2009 and 2014.

The deal is consistent with NEE’s strategy to divest plants in its generation portfolio that sell power in competitive markets such as in Texas and increasingly focus on businesses that are regulated or under long-term contracts that are less volatile and have more predictable earnings.

Luminant’s parent Energy Future Holdings has been under bankruptcy court supervision since April 2014. But Luminant says it received permission from the court and appropriate creditor groups to fund the purchase with cash on hand and borrowings from its existing debtor-in-possession credit facility. In the event that the deal does not go through, Luminant could be liable for a breakup fee of up to $131.3 million, or 10% of the purchase price.

Following the close of the deal, NEE will continue to operate non-utility generation assets in 25 US states and Canada with a total generation capacity of 17,000 megawatts.

Mihoko Manabe, CFA Senior Vice President +1.212.553.1942 mihoko.manabe@moodys.com

Gidon Eydelnant Associate Analyst +1.212.553.1775 gidon.eydelnant@moodys.com

NEWS & ANALYSIS Credit implications of current events

9 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Edison S.p.A. Wins Credit-Positive Court Ruling on Libyan Gas Last Friday, Italian utility Edison S.p.A. (Baa3 stable), a 99%-owned subsidiary of French utility Electricite de France (EDF, A1 negative), announced that the International Court of Arbitration of the International Chamber of Commerce ruled in its favor in a 2012 dispute with Italian energy firm ENI S.p.A (A3 stable) over the price of a Libyan gas supply contract. The ruling, which will prompt a payment of around €1 billion, is credit positive for Edison.

Edison indicated that the court decision will effectively add about €850 million to EBITDA. The company in October confirmed its 2015 EBITDA guidance of about €1 billion, including the positive effect of the arbitration. We now expect Edison’s full-year 2015 EBITDA to exceed €1.1 billion given that it generated EBITDA of more than €270 million in the first nine months of the year. We also estimate that the post-tax effect of the cash would have translated into a ratio of funds from operations (FFO) to net debt of 20.9% as of 30 June 2015 had the cash been received at that date, or 430 basis points higher than the actual ratio at that date.

Edison is the second largest gas supplier in Italy, with sales of 13.2 billion cubic meters in 2014. It imports gas under long-term take-or-pay contracts linked to oil prices, and resells the gas at local spot market prices. The company’s profitability has been negatively affected by the difference since 2009 between higher oil-linked prices and lower spot gas prices (the gas/oil spread) (see Exhibit 1).

EXHIBIT 1

Gas/Oil Spread (Title Transfer Facility/Brent) in Euros per Megawatt Hour

Sources: FactSet and Moody’s Investors Service

Over 2011-14, Edison has had some success on a number of gas purchase contract renegotiations or arbitrations, reversing certain losses. However last Friday’s ruling, for which a decision on legal costs and interests is still pending, is the most material (see Exhibit 2).

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

Paul Marty Vice President - Senior Credit Officer +44.20.7772.1036 paul.marty@moodys.com

NEWS & ANALYSIS Credit implications of current events

10 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EXHIBIT 2

Renegotiation and Arbitration of Edison’s Long-Term Gas Supply Contracts Date Renegotiation/Arbitration Supplier Gas Origin Additions to EBITDA

February 2011 Renegotiation ENI Norway Not available

July 2011 Renegotiation Promgas Russia About €200 million

September 2012 Arbitration RasGas Qatar €438 million

October 2012 Arbitration ENI Libya €242 million

April 2013 Arbitration Sonatrach Algeria

€813 million July 2013 Renegotiation Sonatrach Algeria

July 2013 Renegotiation RasGas Qatar

August 2014 Arbitration Promgas Russia €80 million

November 2015 Arbitration ENI Libya €850 million

Notes: Promgas is an Italian subsidiary of Russian energy firm Gazprom PJSC. Liquefied natural gas supplier RasGas is a joint venture of Qatar Petroleum and Exxon Mobil Corporation. Sonatrach is an energy firm owned by the Algerian government.

Sources: Edison and Moody’s Investors Service

The court ruling is also credit positive for EDF. The positive €850 million EBITDA accounts for around 5% of the French utility’s last-12-months EBITDA of €17.6 billion as of 30 June 2015.

NEWS & ANALYSIS Credit implications of current events

11 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Banks

ECB’s Data Shows Italian Banks’ Capital Buffers Improved Last week, 11 out of 13 Italian banks directly supervised by the European Central Bank (ECB) reported their bank-specific capital requirements, which are to be met throughout 2016. While the ECB’s requirements are fairly stable compared with required ratios in the first quarter of 2015, actual capital buffers have improved since the first quarter by around €3.1 billion in aggregate,1 a credit positive for Italian banks. That the ECB’s capital requirements have changed little since the first quarter of 2015 indicates that it considers Italian banks’ risk profiles little changed while banks’ capital levels have increased, a credit positive.

Under its Supervisory Review and Evaluation Process (SREP), the ECB assesses banks’ risk profiles and takes supervisory action based on this diagnostic, including setting banks’ individual capital ratios. In most cases the higher the risk profile, the greater the capital requirement, which is communicated to banks on a confidential basis. However in compliance with the Italian Securities and Markets Authority (Consob) rules announced last Thursday, Italian banks that have ratios below the ECB’s prudential requirements were instructed to disclose the capital ratio requirement. At the same time, Consob also indicated that banks with a capital ratio above the ECB’s required level can disclose their capital requirement voluntarily.

Following Consob’s clarification, 11 Italian banks reported their prudential requirements for the common equity Tier 1 ratio (CET1). The first-quarter 2015 SREP showed an average CET1 prudential requirement of 9.64% for Italian banks, which compared with an average CET1 ratio of 10.8% as of December 2014. The 115 basis point (bp) average capital buffer equalled around €20.2 billion in aggregate for the system. At that time, four Italian banks had shortfalls of around €2.0 billion in aggregate, which were covered by capital increases completed in 2015.

The ECB’s latest SREP showed an average CET1 prudential requirement of 9.68%, an increase of 4 bp from the first quarter SREP, indicating banks’ unchanged risk profile in 2015 (see exhibit). The latest average CET1 ratios for the banks under the ECB’s direct supervision is 11.2%; the buffer is now 160 bp, or €23.3 billion, €3.1 billion higher than in February.

1 See Italian Banks Improve Capital Buffers Over the European Central Bank’s Requirements, 30 November 2015.

London +44.20.7772.5454

NEWS & ANALYSIS Credit implications of current events

12 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Supervisory Review and Evaluation Process Common Equity Tier 1 Requirements and Buffers

Bank Prudential

Requirement 2015 Actual Ratio Dec-

2014 Buffer vs 2015

Requirement Prudential

Requirement 2016 Actual Ratio Sep-

2015 Buffer vs 2016

Requirement

UniCredit SpA 9.50% 10.41% 0.91% n/a 10.53% n/a

Intesa Sanpaolo Spa 9.00% 13.50% 4.50% 9.50% 13.40% 3.90%

MPS 10.20% 8.70% -1.50% 10.20% 12.00% 1.80%

Banco Popolare 9.40% 11.87% 2.47% 9.55% 12.70% 3.15%

UBI 9.50% 12.33% 2.83% 9.25% 13.00% 3.75%

Mediobanca 9.00% 11.00% 2.00% 8.75% 12.45% 3.70%

BPER 9.00% 11.26% 2.26% 9.25% 11.62% 2.37%

BPM 9.00% 11.58% 2.58% 9.00% 11.44% 2.44%

Iccrea Holding 9.25% 11.45% 2.20% n/a 12.40% n/a

BP Vicenza 11.00% 10.44% -0.56% 10.25% 6.94% -3.31%

BP Sondrio 9.00% 9.75% 0.75% 9.25% 10.25% 1.00%

Veneto Banca 10.00% 9.56% -0.44% 10.25% 7.12% -3.13%

Banca Carige S.p.A. 11.50% 8.40% -3.10% 11.25% 12.20% 0.95%

Notes: Banks shown in the exhibit are UniCredit SpA (Baa1/Baa1 stable, ba1); Intesa Sanpaolo Spa (Baa1 review for upgrade/Baa1 stable, baa3); Banca Monte dei Paschi di Siena S.p.A. (MPS, B3 review for upgrade/B3 negative, caa2); Banco Popolare Societa Cooperativa (Banco Popolare, Ba3 review for upgrade/Ba3 stable, b2); Unione di Banche Italiane S.p.A. (UBI, Baa2 review for upgrade/Baa2 stable, ba1); Mediobanca (unrated), Banca Popolare dell’Emilia Romagna (BPER, unrated), Banca Popolare di Milano S.C.a.r.l. (BPM, Ba3 review for upgrade/Ba3 stable, b2); Iccrea Holding (unrated); Banca Popolare di Vicenza (BP Vicenza, unrated); Banca Popolare di Sondrio (BP Sondrio, unrated); Veneto Banca (unrated); Banca Carige S.p.A. (Caa1 review for upgrade/Caa1, caa3). The bank ratings shown in this report are the banks’ deposit ratings and senior unsecured debt ratings, and their baseline credit assessments. For Iccrea, the latest CET1 ratio is as of June 2015.

Sources: Banks’ press releases

Two banks, BP Vicenza (unrated) and Veneto Banca (unrated), covered their capital deficiencies in 2014 with capital increases. Despite that, further losses in the first half of this year led to additional capital deficiencies of €900 million for BP Vicenza and €800 million for Veneto Banca. The banks will close the gap through additional capital increases by April 2016; BP Vicenza will raise €1.5 billion in capital while Veneto Banca will raise €1 billion. Both banks have reached full underwriting agreements that will guarantee the execution of the capital increases; BP Vicenza’s capital increase has been pre-guaranteed by UniCredit SpA (Baa1/Baa1 stable, ba12), while Veneto Banca’s capital increase by Banca IMI SpA (Baa1 review for upgrade/Baa1 stable, baa3).

2 The bank ratings shown in this report are the banks’ deposit ratings and senior unsecured debt ratings, and their baseline credit

assessments.

NEWS & ANALYSIS Credit implications of current events

13 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EBRD Subscribes to a Capital Increase for Raiffeisen Bank International’s Ukrainian Subsidiary, a Credit Positive On 25 November, Austrian lender Raiffeisen Bank International AG (RBI, Baa2/Baa2 negative, ba33) announced that the European Bank for Reconstruction and Development (EBRD, Aaa stable) will subscribe to part of a €122 million capital increase at RBI’s Ukrainian subsidiary Raiffeisen Bank Aval (RBA, Caa2 stable, caa3). The deal gives EBRD a 30% stake in the troubled lender.

The capital increase, which we believe is split equally between RBI and EBRD, is credit positive for both RBA and RBI because it will strengthen their capital. The Ukrainian bank’s Tier 1 capital ratio will strengthen to 14.2% from 6.9% at the end of September (see exhibit). Furthermore, we expect that the capital increase at RBA also improves RBI’s fully loaded common equity Tier 1 (CET1) ratio by between five and 10 basis points from the 10.8% that the Austrian bank reported at the end of September. The move complements RBI’s decision to reduce its Ukrainian bank activities by around one third based on year-end 2014 risk-weighted assets, an important component of its comprehensive strategic review programme.

Raiffeisen Bank Aval’s Tier 1 Capital and Problem-Loan Ratios, 2012 to Third-Quarter 2015

Source: Raiffeisen Bank International

RBI’s restructuring became necessary after the Austrian bank reported its first-ever annual consolidated net loss of €493 million in 2014, to which RBA’s after-tax losses of €290 million significantly contributed. Key drivers were the depreciation of the Ukrainian currency, the hryvnia, and an increase in RBA’s problem loans to 45.8% at the end of 2014 from 29.5% in 2013 that required higher-than-expected credit provisions.

The additional capital buffer will help RBA weather the Ukraine’s challenging economic conditions, which are reflected in RBA’s volatile quarterly net income. The bank reported an after-tax net loss of €82 million in the first quarter of 2015, a net profit of €25 million in second quarter and a net profit of €1 million in the third quarter. Its problem-loan ratio has continued to deteriorate, reaching 56.2% at the end of September from 45.8% in 2014.

In addition to the announced capital increase, which will more than double RBA’s €114 million equity as of the end of September 2015, the bank raised its on-balance sheet provisioning to a 90.2% coverage ratio from 86.9% at the end of 2014 and 70.7% at the end of 2013, an important risk mitigant.

3 The ratings shown in this report are the banks’ deposit rating, senior unsecured debt rating (where available) and baseline

credit assessment.

20.1% 22.2%

7.9% 6.9%

14.2%

34.8%

29.5%

45.8%

56.2%

0%

10%

20%

30%

40%

50%

60%

2012 2013 2014 September 2015 Pro-Forma Capital Increase

Tier 1 Capital Ratio Problem Loan Ratio

Swen Metzler, CFA Vice President - Senior Analyst +49.69.70730.762 swen.metzler@moodys.com

NEWS & ANALYSIS Credit implications of current events

14 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

The announced capital increase is subject to RBA’s shareholder approval at a scheduled 3 December general meeting. If approved, RBI’s stake will decline to around 67% from 96%. The remainder reflects RBA’s listed stock free float of around 4%.

RBI is under pressure to deliver on its announced strategic review program in order to achieve a fully loaded CET1 ratio of 12% by the end of 2017. It is attempting to sell its Polish bank subsidiary Polbank, which would be an important milestone to achieving this goal. Challenges in key markets, including Russia and Ukraine, have negatively affected RBI’s capitalization and profits and led the bank to announce significant restructuring measures in February 2015 aimed at reducing risk-weighted assets (RWAs) by €16 billion by year-end 2017, or around 23% of its end of December 2014 RWAs.

NEWS & ANALYSIS Credit implications of current events

15 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Existing Creditors and New Equity Investors Contribute to Eurobank’s Recapitalisation, Benefiting Security Holdouts Last Thursday, Eurobank Ergasias S.A. (Caa3/C negative, ca4) released its prospectus for listing new ordinary shares on the Athens Stock Exchange as part of its capital increase. The bank disclosed that it was able to raise its capital needs of €2.1 billion from private sources, and thus will not have to tap any capital injection from the state through the Hellenic Financial Stability Fund’s (HFSF) backstop facility. Eurobank’s capital needs were partly covered by the bank’s bondholders, whose principal value declined 20%-50% swapping their debt securities for shares depending on seniority, which we consider a distressed exchange.

Consequently, the bank’s bondholders that did not accept its voluntary exchange offer (security holdouts) will remain whole from any enforced debt-equity swap or bail-in during this recapitalisation. Despite the bank’s successful recapitalisation, downside risks for remaining debtholders remain heightened owing to the still-high level of deferred tax assets on its books that weaken its tangible capital base, combined with the substantial volume of nonperforming loans and the economic recession in Greece.

Eurobank’s recapitalisation was achieved at the expense of many of the existing creditors that were compelled to exchange their securities against shares, and the existing shareholders whose investments were significantly diluted. The bank’s capital needs, which the European Central Bank (ECB) estimated at €2.1 billion under the adverse scenario of its comprehensive assessment on 31 October, were covered without the involvement of the HFSF. The bank’s liability management exercise through its exchange offer to security holders contributed around €418 million, in addition to €1.6 billion of new funds from the sale of new equity. The bank also benefited from around €84 million of capital relief through various other ECB-approved capital actions.

The bank’s liability management exercise was successful because the majority of its security holders accepted its exchange offer, contributing to its recapitalisation. Nonetheless, the bank accepted only 50% of the amount tendered by senior bondholders given the more-than-adequate capital it was able to raise from its equity book building, minimising their potential losses. The residual 50% of tendered senior bonds will remain as outstanding debt on the bank’s balance sheet, in addition to the security holdouts amounting to around €236 million (see exhibit below).

Eurobank Ergasias’ Exchange Offer Results, € Millions

Outstanding Securities Offers Tendered Security Holdouts Offers Accepted by the Bank Securities to Remain Unaffected

Senior Bonds € 533 € 416 € 117 € 208 € 325

Tier 2 Securities € 267 € 192 € 75 € 192 € 75

Tier 1 Securities € 78 € 34 € 44 € 34 € 44

Total € 878 € 642 € 236 € 434 € 444

Note: The €434 million of offers that the bank accepted differs from the €418 million of new shares to be issued to security holders mentioned in the article because of the accrued interest on senior bonds and the exchange offer’s write-down feature on the Tier 2 (20%) and Tier 1 (50%) securities. Source: Eurobank Ergasias’ 26 November 2015 prospectus

4 The bank ratings shown in this report are the Eurobank Ergasias’ deposit rating, senior unsecured rating and baseline

credit assessment.

Nondas Nicolaides Vice President - Senior Credit Officer +357.25.586.586 nondas.nicolaides@moodys.com

NEWS & ANALYSIS Credit implications of current events

16 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Concurrently, the bank’s security holdouts will not be affected by any mandatory debt-equity swap or bail-in during this recapitalisation round because the bank does not have to resort to the state-owned HFSF for any capital funds. Although the bank’s common equity Tier 1 (CET1) capital ratio will be around 17.7% following its recapitalisation, downside risks remain elevated for its remaining security holders. Such risks emanate mainly from the bank’s very high level of nonperforming loans (approximately 35% of gross loans as of September 2015), and the still-sizable level of deferred tax assets on its books (€4.9 billion compared with approximately €7 billion CET1 capital) weakening the bank’s tangible capital base and loss- absorbing cushion.

NEWS & ANALYSIS Credit implications of current events

17 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Russian Retail Sales Contract Sharply, a Credit Negative for Banks Lending to the Sector Last Thursday, the Russian Ministry for Economic Development released statistics showing that October retail sales contracted 11.7% year on year as real wages and salaries fell 10.9% and GDP declined 3.7%. The October retail sales decline was the steepest in 20 years, a credit negative for banks with high exposures to retail and wholesale trade borrowers, whose problem loans will increase. We expect that the overdue loans in this sector will likely increase to 27%-29% of total overdue loans (calculated per the Central Bank’s approach) over next 12 months.

Among the top 20 rated Russian banks by assets, loans to borrowers in the retail and wholesale sector exceeded 100% of shareholders’ equity at Rossiysky Kapital Bank (Ba1.ru5), which is currently under Central Bank financial rehabilitation, Novikombank JSCB (B2/B2 negative, b3), Bank ZENIT PJSC (B1/B1 negative, b1), Commercial Bank AK BARS PJSC (B2/B2 negative, caa1), Bank Uralsib (Caa2 positive, ca) and Vozrozhdenie Bank (B1 stable, b1) (see Exhibit 1). Although these high exposures mean that the banks are likely to see a significant increase in problem loans to retail borrowers, the retail and wholesale trade sector is quite diverse and some wholesale borrowers are showing some resistance (e.g., exports are benefiting from the weak ruble supporting demand, and the government supports some wholesale sectors).

5 Rossiysky Kapital Bank’s rating is a national scale rating. Other bank ratings shown in this report are the banks’ deposit ratings, senior unsecured debt ratings (where available) and baseline credit assessments.

Alexander Proklov Vice President - Senior Analyst +7.495.228.6072 alexander.proklov@moodys.com

Victoria Voronina Associate Analyst +7.495.228.6113 victoria.voronina@moodys.com

NEWS & ANALYSIS Credit implications of current events

18 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EXHIBIT 1

Top 20 Rated Banks by Assets Most Exposed to Retail and Wholesale Trade Sector

Local Currency Deposit Rating / Baseline Credit

Assesment

Trade Sector Loans RUB

Millions Gross Loans

RUB Millions

Shareholder Equity RUB

Millions

Trade Sector Loans to Gross

Loans

Trade Sector Loans to

Shareholder Equity

Rossiysky Kapital N/A** 19,162 106,934 3,588 18% 534%

Novikombank JSCB B2/B2 Negative, b3 25,725 166,198 13,526 15% 190%

Bank ZENIT B1/B1 Negative, b1 41,960 223,676 27,131 19% 155%

Commercial Bank AK BARS, PJSC B2/B2 Negative, caa1 43,034 293,819 30,259 15% 142%

Bank Uralsib Caa2 Positive, ca 32,576 212,796 25,126 15% 130%

Vozrozhdenie Bank B1 Stable, b1 26,120 163,459 23,327 16% 112%

Bank of Moscow Ba2/Ba2 Negative, b2 179,400 1,376,800 187,600 13% 96%

Sberbank Ba1/Ba1 Negative, ba2 1,928,500 17,781,000 2,162,600 11% 89%

Bank of Saint-Petersburg B1*/(P)B1 Negative, b1 37,863 334,386 54,429 11% 70%

Absolut Bank B1 Negative, b1 15,864 152,521 27,835 10% 57%

AO RAIFFEISENBANK Ba2/Ba2 Negative, ba2 51,400 540,940 97,424 10% 53%

Bank VTB, JSC Ba1/Ba1 Negative, b1 532,500 8,607,700 1,086,900 6% 49%

Alfa-Bank Ba2/Ba2 Negative, ba3 96,723 1,446,955 244,583 7% 40%

Bank Otkritie Financial Corporation PJSC Ba3/Ba3 Negative, b1 88,995 2,390,026 200,035 4% 44%

VTB24 Ba1/Ba1 Negative, b1 83,528 1,795,171 211,062 5% 40%

JSB Rosbank Ba1/Ba1 Negative, ba3 48,380 734,112 129,644 7% 37%

Russian Agricultural Bank Ba2/Ba2 Negative, b3 62,224 1,553,942 197,999 4% 31%

Khanty-Mansiysk Bank Otkritie B1 Negative, b2 16,494 382,890 54,807 4% 30%

Gazprombank Ba2/Ba2 Negative, b1 91,940 3,117,869 416,637 3% 22%

ING Bank Eurasia Baa3 Negative, ba3 5,342 37,333 34,339 14% 16%

Notes: * Foreign currency deposit rating. ** Bank Rossiysky Kapital has a national scale rating of Ba1.ru; it does not have global scale rating. The Credit Bank of Moscow and Vneshprombank are excluded from the list because trade sector data are unavailable. Sources: Banks’ statements (year-end 2014 and first-half 2015) and Moody’s Investors Service calculations

Overall, loans to the retail and wholesale trade sector accounted for 20.6% of ruble-denominated corporate and small and midsize enterprise loans in Russia as of 30 September 2015 (see Exhibit 2), while loans to this sector comprised 24.5% of total overdue loans (see Exhibit 3).

NEWS & ANALYSIS Credit implications of current events

19 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

EXHIBIT 2

Ruble-Denominated Corporate and Small and Midsize Enterprise Loans by Industry as of October 2015

Source: The Central Bank of Russia

EXHIBIT 3

Ruble-Denominated Corporate and Small and Midsize Enterprise Overdue Loans by Industry as of October 2015

Source: The Central Bank of Russia

We expect the increase in overdue loans to contribute to the banking system’s overall increase in problem loans that we have previously forecast. Our base case is that problem loans will rise to an average of 14% of Russian banks’ total loans over the next 12-18 months, from 9.5% at the end of 2014.6 We also expect that Russian banks will further tighten lending policies to retail and wholesale trade borrowers; bank loans to the sector have already decreased to 12.9% of total banking system loans as of 1 October 2015 from 13.7% at the end of 2013.

6 See Russian Banking System Outlook, 15 October 2015.

Manufacturing20.7%

Construction8.1%

Retail and wholesale trade20.6%Real estate activities

13.5%

Mining, electricity, gas and water supply8.2%

Agriculture6.7%

Transport and communications6.7%

Other15.5%

Manufacturing15.7%

Construction20.2%

Retail and wholesale trade24.5%

Real estate activities10.0%

Mining, electricity, gas and water supply2.5%

Agriculture8.3%

Transport and communications4.0%

Other14.7%

NEWS & ANALYSIS Credit implications of current events

20 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Revised Romanian Covered Bond Law Is Credit Positive for Banks On 26 November, Romania President Klaus Iohannis approved the new covered bond law that the parliament passed earlier in the month. The new law replaces an existing covered bond law that banks did not use. Once published, the law will come into force in 90 days, paving the way for the first Romanian covered bonds later in 2016 and a new source of long-term funding for banks, a credit positive.

The implementation of the covered bond law will allow the banks to issue covered bonds to reduce the large mismatch between their long-term assets and shorter-term liabilities, diminishing liquidity risk. Mortgages in local currency, the leu, are a fast-growing asset class in Romania.

Romanian banks are predominantly funded with domestic corporate and retail deposits, which accounted for more than 65% of their total liabilities as of June 2015. The share of short-term (up to one year) deposits was 93% of total deposits. According to data from the five largest Romanian banks, only 32% of the banks’ long-term (over one year) financial assets on average were funded by long-term liabilities (see exhibit).

Largest Romanian Banks’ Funding Maturity Analysis, December 2014

Sources: Banks’ annual reports

The Romanian covered bond law provides investors with a priority right to the mortgage loans in the cover pool in the event that the issuing bank fails to meet its payment obligations under the bonds. Compared with securitisations and other forms of bank funding, covered bond investors benefit from two levels of recourse: a direct claim on the issuing bank and a claim on cover pool assets.

Credit-positive features of the new law include provisions that reduce risks to timely payment following an issuer default, in line with more established covered bond markets. A daily liquidity test requires that liquid assets cover shortfalls between incoming and outgoing cash flows over the next 180 days. By including principal and interest, the 180-day test provides a degree of coverage for upcoming maturities. The law also provides that a dedicated cover pool administrator will assume control of the covered bond programme, which will be insulated from the bank’s insolvency. The administrator’s powers include the ability to borrow against the cover pool to repay maturing covered bonds, reducing the risk of a failure to make timely payments. The National Bank of Romania is currently drafting the secondary regulations for a number of important aspects of the new legal framework.

0

20

40

60

80

100

120

140

160

Up to 1 year Over 1 year

RON

Bill

ions

Assets Liabilities

Alexander Zeidler Vice President - Senior Credit Officer +44.20.7772.8713 alexander.zeidler@moodys.com

Armen Dallakyan Vice President - Senior Analyst +44.20.7772.1688 armen.dallakyan@moodys.com

John Hogan Assistant Vice President - Analyst +44.20.7772.5260 john.hogan@moodys.com

NEWS & ANALYSIS Credit implications of current events

21 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Increased Corporate Leverage Threatens Singapore Banks’ Asset Quality Last Friday, the Monetary Authority of Singapore (MAS) published its Financial Stability Report, including comprehensive data showing weakening credit quality of domestic corporates, a credit negative for Singapore’s DBS Bank Ltd (Aa1/Aa1 stable, aa37), Oversea-Chinese Banking Corporation (OCBC, Aa1/Aa1 stable, aa3) and United Overseas Bank Limited (UOB, Aa1/Aa1 stable, aa3). The banks’ asset quality will be negatively pressured, leading to higher credit costs that will limit their internal capital generation.

MAS data showed that the share of debt owed by Singapore companies that are highly leveraged has risen significantly both in relation to earnings and equity. The share of debt owed by listed firms – with both debt/equity of more than 2x and debt/EBITDA of more than 4x – increased to 10% of total debt of listed corporates as of June 2015, from around 3% in June 2008. Also, the share of debt owed by corporates with weak earnings relative to interest payments – as captured by firms with EBITDA/net interest expense of less than 2x – increased to 11% in June 2015 from 8% in June 2014.

The MAS data also showed an increase in nonperforming loan (NPL) ratios. As of September 2015, the corporate NPL ratio was 1.8%, compared with the three-year average of 1.6%. As of June 2015, the NPL ratio in the small and midsize enterprise (SME) sector was 1.3%, exceeding the three-year average of 0.9%.

Earlier this month, OCBC and UOB attributed increases in their NPLs to corporate borrowers in the oil and gas sector, while DBS raised concerns around SME asset quality in Singapore and Hong Kong. In addition, the three Singapore-based banks have sizable regional operations outside Singapore that make up 40%-60% of their loan portfolios. Hence, they also face rising corporate leverage and weaker debt repayment capacities in key overseas markets such as Greater China (including Hong Kong and mainland China), and South and Southeast Asia (including India, Indonesia, Malaysia and Thailand).

These headwinds will erode banks’ capital levels as profitability weakens and negative credit migrations result in higher risk weights on their credit exposures. Nevertheless, the Singapore banks will still have strong capital buffers. As of September 2015, all three banks had common equity Tier 1 ratios well above regulatory minimum of 9%, which includes 2.5% capital conservation buffer and 2% buffer for domestic systemically important banks (see exhibit).

Common Equity Tier 1 Ratios of the Three Singapore Banks

Note: Ratings shown are baseline credit assessments. Sources: The banks

7 The ratings shown are the bank’s deposit rating, senior unsecured debt rating and baseline credit assessment.

0%1%2%3%4%5%6%7%8%9%

10%11%12%13%14%15%

Oversea-Chinese Banking Corporation (aa3) United Overseas Bank Limited (aa3) DBS Bank Ltd (aa3)

December 2014 September 2015

Simon Chen, CFA Vice President - Senior Analyst +65.6398.8305 simon.chen@moodys.com

Eugene Tarzimanov Vice President - Senior Credit Officer +65.6398.8329 eugene.tarzimanov@moodys.com

NEWS & ANALYSIS Credit implications of current events

22 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

On the positive side, the NPL ratio for housing loans remained low at 0.4% as of September 2015, unchanged from 2014. MAS data showed stabilization in household debt accumulation and credit quality, which will support the banks’ overall credit profiles. Household debt/income stabilized at 2.2x in 2014, unchanged from 2013, and was supported by a continued slowdown in housing loan growth.

NEWS & ANALYSIS Credit implications of current events

23 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

Sovereigns

Zambia Begins Construction of Major Hydro-Power Project, a Credit Positive Last Saturday, the Government of Zambia (B2 stable) began building the 750-megawatt Kafue Gorge Lower power project, the first major energy infrastructure project in four decades. The government expects to complete it in four years at a cost of about $2 billion. The $2 billion project is co-financed by China’s Exim Bank (85%) and the Government of Zambia (15%), and China’s state-owned Sino Hydro Corporation Limited will build it.

The credit-positive project will reduce Zambia’s large electricity gap, which is currently one of the biggest constraints on the nation’s growth. This year, the electricity deficit – the amount by which the demand exceeded prevailing supply – is 600-700 megawatts, or more than one third of Zambia’s current power-generating capacity. Production of copper, which accounted for about 10% of GDP in 2014, typically consumes more than half of the Zambia’s generated capacity. Combined with the sharp decline in copper prices, the electricity shortages were key factors in the suspension of several copper mines and massive layoffs.

The electricity gap played a key role in our real GDP growth forecast of 4.6% in 2015 and 5.0% in 2016, which are below the government’s initial forecast, as stipulated in the original 2015 budget, of about 7% GDP. A reduction in the electricity gap could add one to two percentage points to Zambia’s long-term (trend) real GDP growth. This is consistent with the World Bank’s Africa Infrastructure Country Diagnostics estimates, which indicate that poor power sector performance in the 2000s constrained Zambia’s real GDP per capita growth by about 0.6 percentage points per year.

More (and more reliable) electricity will also facilitate economic diversification, including developing agro-processing and building industrial parks. By supporting rural electrification, the project will also reduce wide rural-urban economic inequalities. The construction itself is expected to generate about 5,000 jobs.

The project also shows China’s continued commitment and commercial interest in Zambia, despite its own slower growth. Before this project (at the end of 2013), Chinese foreign direct investment (FDI) in Zambia was $2.16 billion, making Zambia the country with the highest FDI per capita in Africa and particularly vulnerable to reduced FDI inflows or even FDI outflows. Other developments also point to continued economic relations between China and Zambia: China recently agreed on a concessional loan of $30 million to develop productive small and midsize enterprises, and signed memorandums of understanding on clearing trade in renminbi.

Zuzana Brixiova Vice President - Senior Analyst +44.20.7772.1628 zuzana.brixiova@moodys.com

Jeffrey Christiansen Associate Analyst +971.4.237.9574 jeffrey.christiansen@moodys.com

RECENTLY IN CREDIT OUTLOOK Select any article below to go to last Monday’s Credit Outlook on moodys.com

24 MOODY’S CREDIT OUTLOOK 3 DECEMBER 2015

NEWS & ANALYSIS Corporates 2

» Pfizer’s Allergan Deal Brings Benefits, but Buybacks Are Credit Negative

» Deutsche Wohnen’s Acquisition of Residential Units Is Credit Negative

» China National Petroleum Corporation’s Pipeline Assets Sale Is Credit Positive

Infrastructure 6

» Connecticut’s Draft Approval of UIL Holdings-Iberdrola USA Merger Is Credit Positive

» SNCM Takeover Paves Way for Veolia’s Credit-Positive Disposal of Transdev Stake

» Norway’s About Face on Planned Dividend Cut Is Credit Negative for Statkraft

Banks 9

» Argentina’s Election Outcome Favors a Shift Toward Market-Friendly Policies, a Credit Positive for Banks

» Resolution of Four Italian Banks Protects Senior Debt, Writes Off Subordinated Debt

» Extraordinary Payment to Poland’s Bank Guarantee Fund Is Credit Negative for Banks

» Nigeria’s Loosened Monetary Policy Will Improve Banks’ Liquidity

» Sri Lankan Banks Will Benefit from Curbs on Pawning and Consumer Finance Loans

Insurers 19

» Proposed Affordable Care Act Changes Are Credit Negative for US Health Insurers

Sovereigns 20

» Sri Lanka’s Continued High Fiscal Deficits Are Credit Negative

Sub-sovereigns 22

» Nuevo Leon, Mexico’s Elimination of the Vehicle Tax Is Credit Negative

» Italian Regions’ Bond Buyback Is Credit Positive

RATINGS & RESEARCH Rating Changes 25

Last week we downgraded Petroleos Mexicanos, Tervita, TerraForm Global Operating, TerraForm Power Operating, Wisconsin Public Service and some Banc of America Commercial Mortgage CMBS, and upgraded four Ukrainian banks, Al Fujairah National Insurance Company, QBE Insurance Group, Kharkiv Ukraine, covered bonds issued by AIB Mortgage Bank and EBS Mortgage Finance, Ally prime auto loan ABS, AmeriCredit subprime auto loan ABS and Fifth Third prime auto loan ABS, among other rating actions.

Research Highlights 33

Last week we published on Brazilian corporates, US poultry, Chinese property developers, GAIL (India) Limited, Filipino banks, Saudi Arabian banks, global systemically important banks, banks’ deferred tax assets, Italian banks, Indian finance companies, Egypt, Uganda, Eurasian Development Bank, Senegal, International Finance Corporation, Japan, Argentina, Alberta Canada, Warsaw Poland, New Jersey & New York, Pennsylvania schools, cyber risk, Sydney Australia housing and Italian covered bonds, among other reports.

MOODYS.COM

Report: 186355

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EDITORS PRODUCTION ASSOCIATE News & Analysis: Elisa Herr and Jay Sherman Alisa Llorens