US companies boost liquidity; auto insurers hike rates; office sector risk rises
Sarah Cottle
Growth-Focused Executive | GM | Driving Profitability & Operational Excellence in B2B Data, Research, Advisory | M&A Integration | Governance | Digital Transformation | Trusted C-Suite Advisor | Board Member
Today is Tuesday, September 05, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of?Insight Weekly, we take a close look at some key indicators of US companies' financial health. The median cash ratios for investment-grade and non-investment-grade companies rated by S&P Global Ratings rose in the second quarter of 2023, according to S&P Global Market Intelligence data. A closely watched gauge of liquidity, the cash ratio measures a company's ability to pay its short-term debt using cash and cash equivalents. The metric rose for investment-grade firms in seven of the 11 sectors, with particularly strong gains in materials and communication services. Companies deleveraged further in the second quarter, with the median debt-to-equity ratio falling more sharply among non-investment-grade firms. Corporates also reduced their expenses to boost efficiency, resulting in a decline in operating expense-to-total revenue ratios in the quarter.
US private auto insurers are racing to increase premium rates as they seek to offset historically poor underwriting results. The year-to-date nationwide average increase for private auto insurance is 11.0% through Aug. 18, 2023, according to S&P Global Market Intelligence's RateWatch application. In total, 32 states reflect a double-digit increase based on about 8.5 months of approved rate filings.
The US office real estate sector faces a higher risk of loan defaults and delinquencies as increasing vacancies, declining property valuations and tougher refinancing hound office landlords. A further interest rate rise, which the US Federal Reserve could announce at its September meeting, would put further pressure on commercial real estate.
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US Corporates' Financial Health in Focus
US companies boost liquidity positions in Q2
Median cash ratios increased again in the second quarter as companies hold more cash relative to their liabilities.
—Read the full article from S&P Global Market Intelligence
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US companies reduce debt loads as interest burden grows
US companies deleveraged further in the second quarter, with a noticeable acceleration by those with lower credit ratings.
—Read the full article from S&P Global Market Intelligence
US companies becoming more efficient by cutting expenses
The median ratio of operating expenses compared to total revenues for companies rated investment grade by S&P Global Ratings declined to 82.8% in the second quarter.
—Read the full article from S&P Global Market Intelligence
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Deep Dives
In-depth features looking at the impact of major news developments in key industries.
Financials
Rate increases push bank bond portfolios further underwater??
US bank projections indicate it will be years before the losses reverse, though earnings are enabling many to keep building tangible equity.
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US banks appear confident as commercial real estate delinquencies rise?????????????
Commercial real estate delinquencies climbed for the third consecutive quarter, but banks are working to manage down exposures and say that reserve builds mean they are prepared.
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Financials Research: Bankers less optimistic on future growth – S&P survey
The results of S&P Global Market Intelligence's second-quarter survey of 150 US financial institution clients on questions related to loan growth, recession risk and M&A appetite.
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Ukrainian banks' bulging profits under pressure amid interest rate cuts
The cutting of the key rate by 300 basis points in July and further drops in the pipeline will reduce the income lenders have generated from central bank deposit certificates.
—Read the full article from S&P Global Market Intelligence
Major Japanese banks may issue loss-absorbing capacity bonds as demand returns
Major Japanese banks are likely to follow one of their peers in issuing total loss-absorbing capacity bonds to cover maturing debt, as investor demand returns after the furor over the write-down of Credit Suisse's debt.
—Read the full article from S&P Global Market Intelligence
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Insurance
US private auto insurance rates see double-digit jump in 2023??
The countrywide average increase for private auto insurance rates was 11% through Aug. 18, 2023, as measured by S&P Global Market Intelligence's RateWatch application.
—Read the full article from S&P Global Market Intelligence
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Fintech
Some fintechs walk away from charter applications, leveraging bank partnerships????
Some financial technology companies are rethinking their need for a bank charter as a result of the lengthy application process and an expected higher bar for eligibility.
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Real Estate
Lower valuations, tough refinancing ratchet up risk for US office sector
Office properties are feeling pressure from vacancies, falling valuations and rising interest rates, though analysts said there is a market for quality office space.
—Read the full article from S&P Global Market Intelligence
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Private Equity
Private equity investment in movies, entertainment on track for 5-year low???????
Through Aug. 8, private equity and venture capital firms have announced $1.48 billion of investments in the movies and entertainment sector worldwide this year, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
领英推荐
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Credit and Markets
Malaysian economy moderates in mid-2023
The pace of Malaysia's economic expansion moderated in the second quarter due to several headwinds, including slowing merchandise export growth amid the economic slowdown in key markets.
—Read the full article from S&P Global Market Intelligence
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Energy and Utilities
Hawaiian Electric stock price recovering, but financial, legal pressures mount
Hawaiian Electric Industries Inc.'s stock price regained some ground after an internal investigation determined its power lines did not cause wildfires that ravaged Maui, but the utility remains on precarious financial footing.
—Read the full article from S&P Global Market Intelligence
RRA Research: GE, Vestas top US leaderboard in installed wind capacity, performance
Average wind turbine size in the US continues to increase, with machines in 2023 averaging nearly 3.9 GW of capacity. General Electric leads all companies in both installed turbine capacity and overall performance.
—Read the full article from S&P Global Market Intelligence
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ESG
Google sees trailblazer role in search for 24/7 clean energy
Having begun procuring renewable energy "way before it was trendy," Google is now three years into an effort to power its sprawling global business with renewables around the clock. Analysts said its quest has already moved markets.
—Read the full article from S&P Global Market Intelligence
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Technology, Media and Telecommunications
451 Research: The metaverse and generative AI make for a powerful combination
As large language models generate reports, poems and sketches, and text-to-image tech brings image creation to the masses, what about the metaverse? It needs an almost infinite amount of 3D content and animation. Generative AI is doing that, too.
—Read the full article from S&P Global Market Intelligence
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Metals and Mining
Metals and Mining Research: Nickel CBS August 2023 – Prices drop; China's refined nickel capacity expands
In its monthly Nickel Commodity Briefing Service (CBS) report, S&P Global Commodity Insights discusses the nickel market within the broader macroeconomic environment and provides rolling five-year supply, demand and price forecasts.
—Read the full article from S&P Global Market Intelligence
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Supply Chain
Halloween creeps a little closer: Seasonal supply chains accelerate
Retailers are preparing for Halloween sales earlier than ever, in part due to concerns about a downturn in consumer spending. That has led to earlier shipments of Halloween products than prior years, with decorations outstripping outfits.
—Read the full article from S&P Global Market Intelligence
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The Week in M&A
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US banks dash back to dealmaking as their M&A appetite returns
Deal Tracker: $6.97B New Relic buyout ranks as 3rd-largest infotech deal YTD
Deal Profile: Innovations Financial CU to acquire First National Bank Northwest Florida
Deal Profile: North Carolina-based Coastal Bank to merge into in-state peer Providence Bank
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The Big Number
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Trending
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Compiled by Waqas Azeem