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Fitch: Downward Pressure on US Commercial Paper Ratings Evident
April 25, 2017 / 3:56 PM / 8 months ago

Fitch: Downward Pressure on US Commercial Paper Ratings Evident

(The following statement was released by the rating agency) NEW YORK, April 25 (Fitch) Downward pressure on US commercial paper (CP) ratings due to a variety of company-specific factors amid challenging conditions in certain sectors is evident, according to Fitch Ratings. This pressure is reflected in a greater number of Negative Outlooks and watches than Positive Outlooks and watches, particularly at higher rating levels (BBB/F2 and above). The possibility of a rating change is driven by the level of the Long-Term Issuer Default Rating coupled with a Positive or Negative Outlook or watch. The table below shows US corporate issuers with CP ratings that are at the cusp of a downgrade or upgrade. There are 16 potential negative actions and four potential positive actions. <iframe allowfullscreen src="// ed" title="US Corporate Potential Rating Actions" width="600" height="1078" scrolling="no" frameborder="0"> The preponderance of Negative Outlooks and watches is due to a number of factors including weak operating trends (Caterpillar, Pitney Bowes, Viacom and Xerox); high financial leverage (Dun & Bradstreet, Hubbell, Marathon Oil, Nabors and Plains All American Pipeline); mergers and acquisitions activity (DuPont, Washington Gas Light and Marathon Petroleum) and the potential effects of the bankruptcy of Westinghouse (Georgia Power, Public Service Co. of North Carolina, South Carolina Electric and Gas, and SCANA Corporation). There is a linkage between long-term and short-term ratings reflecting the importance of liquidity and near-term concerns in the assessment of long-term credit profiles and to ensure the two scales do not intuitively contradict each other for a given issuer. As a result of this linkage, CP ratings with corresponding long-term ratings at certain levels will change when the long-term rating changes. Namely, there will be a downgrade of a CP rating from 'F1' to 'F2' if a long-term rating moves from 'A' to 'A-'; from 'F2' to 'F3' if a long-term rating moves from 'BBB' to 'BBB-'; and from 'F3' to 'B' if a long-term rating moves from 'BBB-' to 'BB+'. Similarly, there will be an upgrade of CP from 'F2' to 'F1' when the long-term rating moves from 'A-' to 'A', and from 'F3' to 'F2' when a long-term rating moves from 'BBB-' to 'BBB'. At the 'BBB' level, issuers can have CP ratings of either 'F2' or 'F3', depending on the level of internal and external liquidity. Outlooks indicate the direction a rating is likely to move over a one- to two-year period. They reflect financial or other trends not yet reached or sustained at the level that would cause a rating action, but which may do so if such trends continue. Rating Watches indicate there is a heightened probability of a rating change and the likely direction of such a change. A Rating Watch is typically event-driven, and as such, it is generally resolved over a relatively short period. Contact: Philip Zahn Senior Director Corporate Finance +1 312 606-2336 Fitch Ratings, Inc. 70 W. Madison Chicago, IL Kellie Geressy-Nilsen Fitch Wire +1 212 908-9123 33 Whitehall Street New York, NY Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: Additional information is available on The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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