Daily update: June 24, 2021

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As advanced economies reap the benefits of economic rebounds and the start of a return to a new normal, developing economies endure a more difficult path to recovery

Despite stronger than expected GDP growth in the first quarter of this year, propelled by domestic demand and the performance of the service sector, many emerging economies have faced new waves of coronavirus infections that have led to new blockages and could ultimately restrict activity, according to S&P Global Ratings. Companies in these emerging markets may face high credit risk. To help, the International Monetary Fund plans to increase special drawing rights by $ 650 billion this year to strengthen the reserve adequacy of struggling emerging market economies. Strengthening vaccine deployments in these countries will be essential to stabilize growth.

“Advances in immunization are key to sustaining the momentum for economic recovery. In order to avoid ‘on-and-off’ lockdown measures and return to full capacity operation, a wider deployment of vaccination is needed in most emerging markets, ”S&P Global Ratings said in its report. monthly on emerging market economies. “Full vaccination of around 70% of populations will likely take at least 2022 in most MSs amid the current vaccination rate. This leaves the economic recovery of most emerging countries highly vulnerable to setbacks if the pandemic worsens and leads to further bottlenecks. “

Few emerging markets will experience slower growth than sub-Saharan Africa due to the conditions brought on by the COVID-19 pandemic. By the end of 2024, the combined economies of Ethiopia, Ghana, Kenya, Nigeria and South Africa will be 6.6% smaller than the estimate based on long-term trends before pandemic, according to S&P Global Ratings. On average, those savings are expected to grow 2.7% this year and 3.1% in 2022.

“The rhythm of [this] Nowhere is the rebound enough to bring economies back to their pre-pandemic GDP trajectories, ”S&P Global Economies said in a recent report on the recovery in sub-Saharan Africa.

Slow growth in emerging markets could impact the global economy as a whole, even as decarbonization action intensifies. The International Energy Agency predicts that, without private funding for energy transitions, emerging and developing economies will account for the majority of the increase in greenhouse gas emissions over the coming decades.

“We are all talking about the race for net-zero,” IEA executive director Fatih Birol said on June 21 in a webcast with academic researchers hosted by think tank Brookings Institution, according to S&P Global Platts. “In my opinion, the race is not between countries, but against time. We have to recognize that some countries start the race before others… Unless all the countries cross the finish line, no one wins the race. “

Today it’s Thursday, June 24, 2021, and here is today’s essential intelligence.

The credit cycle


Global actions on business, sovereigns, international public finance and project finance to date in 2021

Rating stocks in June 2021 have declined significantly from the highs in April 2021. So far in 2021, there have been 358 issuers that have had negative rating action and 1,041 issuers with positive rating action. The higher percentage of rating stocks is due to a revised outlook from stable to positive. Much of the recovery is due to stabilization, as more than half of positively rated issuers suffered one or more negatively rated actions in 2020.

—Read the full report of S&P Global Ratings

Median ratios of private nonprofit colleges and universities in the United States for fiscal 2020: measurements begin to show the effects of the pandemic

Enrollment pressures persist for many institutions in the private higher education sector, except for a small group of higher-rated colleges and universities, indicating a growing divergence within the industry.

—Read the full report of S&P Global Ratings

Vision for the US nonprofit healthcare sector has changed from negative to stable

The review reflects a trend towards revenue recovery, continued balance sheet strength and a proactive focus of management teams on maintaining financial stability.

—Read the full report of S&P Global Ratings

Market dynamics


Short sellers cancel bets on financial sector stocks

As equity investors have increased their bets against health care stocks and electric vehicle makers this year, short sellers have moved further and further away from financial sector stocks.

—Read the full article by S&P Global Market Intelligence

Foreign demand supports the US government debt market even as yields fall

A strong dollar makes Treasuries more attractive to foreign buyers – a key source of demand as the U.S. government increases supply to fund the response to COVID-19 – and supports already robust international demand for the business class. assets even if yields fall, experts say.

—Read the full article by S&P Global Market Intelligence

Spotlight: sanctioning of oil projects is accelerating thanks to the rise in oil prices

The pandemic hit the oil market hard in 2020, leading to a reduction in global investment spending by 24% (minus 38% in North America and minus 18% internationally). Oil prices have risen significantly since Brent fell below $ 18 / bbl in April 2020, to the current level of $ 72 / bbl.

—Read the full article by S&P Global Platts

The banking sector under pressure


Japanese banks could revert to US Treasuries, moving away from yen bonds

Japanese banks are likely to turn to investing in US Treasuries and other high-yielding foreign assets as they seek better returns on their inflated deposits. This marks a change after local lenders in 2020 increased their holdings of near-zero yield national government bonds to the highest level in five years.

—Read the full article by S&P Global Market Intelligence

Technology and media


Big Tech could challenge new FTC chairman Khan over objectivity issues

Lina Khan, the new chair of the Federal Trade Commission, is known as a leading critic of Big Tech, a reputation that could actually hamper the ability to harness the power of tech companies, according to industry experts.

—Read the full article by S&P Global Market Intelligence

ESG in the time of COVID-19


Sustainability bonds ‘growing rapidly’ as more companies exploit the ESG debt market

As companies across a wide range of sectors increasingly seek access to the environmental, social and governance debt market, analysts expect accelerated growth in issuance of a nascent type of bonds that links the coupon to the sustainability performance of the issuer.

—Read the full article by S&P Global Market Intelligence

Requalification of the workforce, development of hydrogen and CCS essential for the energy transition: CEO of Enel

The transition to a zero carbon economy will depend on the success of governments in facilitating the transfer of a large part of their workforce to new sectors, as well as a rapid acceleration of technology in renewable hydrogen and carbon capture and storage, said Francesco Starace, CEO of Italian company Enel. June 23.

—Read the full article by S&P Global Platts

UK backs offshore oil and gas licenses despite rising tensions over net zero targets

The UK will still consider offering new offshore oil and gas licenses in the future, Energy Minister Anne-Marie Trevelyan said on June 23, despite mounting pressure on the country to ban all further exploration at following a landmark report on global carbon emissions by the International Energy Agency.

—Read the full article by S&P Global Platts

The future of energy and raw materials


Credit quality improves for Permian G&P as volumes rebound

After a difficult environment in the Permian basin for collection and processing (G&P) companies in 2020, the outlook has improved significantly. West Texas Intermediate (WTI) crude oil was around $ 60 per barrel (bbl) at the start of 2020 and collapsed with the onset of the COVID-19 pandemic. WTI hovered around $ 20 / bbl for much of March and April 2020, and gradually climbed to $ 70 / bbl on June 17, 2021.

—Read the full report of S&P Global Ratings

Most Upstream US Executives Expect Global Oil Supply Gap By 2025: Dallas Fed Investigation

Underinvestment and the focus on energy transition will create a global oil supply shortage within two to four years, according to three-quarters of U.S. oil and gas executives surveyed by the Federal Reserve Bank of Dallas in June.

—Read the full article by S&P Global Platts

ANALYSIS: Gasoline inventories in the United States register an unexpected draw against a backdrop of high demand and lower imports

Gasoline inventories in the United States saw an unexpected drop during the week ended June 18, as implied demand tested pandemic highs and imports plunged, according to data from the US Energy Information Administration on June 23. June.

—Read the full article by S&P Global Platts

INTERVIEW: Iraq to boost exports of medium crude from new Basrah

Iraq expects to export larger volumes of its relatively new and increasingly popular Basrah Medium crude as its production quota increases under the OPEC + supply deal, S&P Global told S&P Global Platts the deputy director of the country’s state distributor.

—Read the full article by S&P Global Platts

China “needs a future coal industry, not a future without coal”

China’s strategy to achieve net zero will require the large-scale deployment of carbon capture, use and storage (CCUS) to remove CO2 from coal-fired power generation and hydrogen production energy experts said at the June 22 forum.

—Read the full article by S&P Global Platts

Interview: Saudi Arabia to auction mining licenses in 2022 to attract foreign investors

Saudi Arabia plans to auction two major mining licenses in 2022, as the world’s largest oil exporter seeks foreign investment in a sector that has a potential untapped reserve value of $ 1.3 trillion, a the deputy minister of mining told S&P Global Platts on June 16.

—Read the full article by S&P Global Platts

Written and compiled by Molly Mintz.

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