COVID-19 Daily Update: April 17, 2020

A third of the world’s population is under lockdown due to the coronavirus pandemic. Leaders in the United States and Europe are signaling that the worst of the crisis may soon be over—although cases are still surging, the world is without a vaccine to treat the virus, and uncertainty around the future for the global economy abounds.

While the U.S. remains the epicenter of the international outbreak, with 687,000 confirmed cases, according to the latest Johns Hopkins University data, governors in the U.S. states of California, Idaho, Texas, Michigan, Minnesota, Wisconsin, Idaho, and additional states are determining how best to gradually reopen their economies. European leaders in Germany, Austria, Denmark, Norway, and the Czech Republic have started lifting restrictions on their populations. The region has suffered some of the greatest death tolls—in Italy, Spain, France, and the United Kingdom combined, more than 75,600 people have died.

The World Health Organization recommends that countries looking to lift restrictions need to: control the transmission of COVID-19; have health systems with capacity to detect, test, isolate, and treat all cases; minimize outbreak risks in high-vulnerability settings; establish preventative measures in workplaces; manage the risks of exporting and importing cases from communities with high-risk of transmission; fully engage communities to make major changes and comply with measures to continually combat the virus like social distancing and contact-tracing.

Since the beginning of the pandemic and especially in recent weeks, the world has watched Asian countries to see how the world’s first COVID-19 lockdowns and economic holds and re-emergences play out. A second wave of coronavirus cases darkens hopes for China, Singapore, and Japan.

According to S&P Global Ratings, an initial one-month lockdown appears to pull full-year GDP lower by about 3% in the Asia-Pacific region. Chief APAC Economist Shaun Roache today revised Asia-Pacific growth in 2020 to 0.3%—with 1.2% growth in China, 1.8% growth in India, and a 3.6% contraction in Japan. The outlook for recovery is a flattish U-shape with activity returning to pre-outbreak levels, if at all, in 2023. Surges of unemployment could change the recovery to an elongated L-shape.

Today, China reported a 6.8% contraction in its first quarter GDP. All data pointed to the deepest quarterly year-on-year contraction since the reform era began in the late 1970s. Some key first quarter economic indicators, including fixed-asset investment, industry production, and completed building floor space, suggest that economic activity improved in March from January-February, according to S&P Global Platts.

The coronavirus crisis to expected to exaggerate Chinese banks’ hierarchies, as approximately one-third of Chinese bank loans are in sectors significantly stressed by the pandemic, according to S&P Global Ratings. Regional lenders with a high exposure to small enterprises will be hit hardest, while the biggest banks will likely come through the turmoil with enhanced market position.

As economies struggle, markets soar. Investors are applauding efforts to lift virus containment and prevention measures, prompting 3% gains for the S&P 500 this week. With surging market volatility, this rally marks the first time since February that U.S. stocks have shown consecutive weekly gains. The Dow Jones Industrial Average showed its best two-week performance since the Depression era of the 1930s. Both indexes are down 10% for this year.   

Amidst the pandemic’s turbulent implications, environmental, social, and governance (ESG) issues have taken on new shapes.

According to S&P Global Market Intelligence, experts believe the latest economic shock will not impact the EU Emissions Trading System, the world's largest carbon market and Europe's flagship tool to force companies to cut their emissions efficiently. The absence of impact was attributed to both concrete measures taken to avoid a repeat of the ETS price crash and the EU's long-term climate ambitions.

European Commission President Ursula von der Leyen said yesterday that European Green Deal investments will remain a priority as part of the bloc’s efforts to kickstart its economy post-crisis.

The coronavirus pandemic has accelerated the energy transition by a decade, according to an analysis by Wartsila, a Finnish power engineering firm. "Electricity demand across Europe has fallen due to the lockdown measures applied by governments to stop the spread of the coronavirus. However, total renewable generation has remained at pre-crisis levels with low electricity prices, combined with renewables-friendly policy measures, squeezing out fossil fuel power generation, especially coal. This sets the scene for the next decade of the energy transition," Bjorn Ullbro, the firm’s vice president for Europe and Africa, said.

Canada committed to spending C$1.7 billion ($1.2 billion) to create new jobs in the hard-hit energy sector for the cleaning up of unused oil wells, as well as C$750 million ($5.4 million) for an emissions reduction fund. “Our goal is to create immediate jobs,” Prime Minister Justin Trudeau said today. “Just because we’re in a health crisis doesn’t mean we can neglect the environmental crisis.”

In the U.S., yesterday the Environmental Protection Agency rescinded the legal basis for the Obama-era Mercury and Air Toxics Standards despite public health advocates’ and even the U.S. electric industry’s objections, according to S&P Global Market Intelligence. The 2012 regulation drove a wave of coal plant retirements by requiring those units to either retrofit with mercury-curbing pollution control technologies or shut down, and since the rule’s proposal in 2011, power sector mercury emissions have plummeted nearly 82%, according to EPA data.

One week after OPEC+ and G20 countries met to negotiate an oil production cut, oil markets have not stabilized. Notably, industry sources told S&P Global Platts that customers of Saudi Arabian crude will receive their allotted May volumes in full, signaling the world's largest oil exporter is unlikely to reduce volumes to its Asian refiners despite the historic production cut agreement of 9.7 million barrels a day in May and June.

Today is Friday, April 17, 2020, and here’s an overview of today’s essential intelligence.

GLOBAL ECONOMY

Default, Transition, and Recovery: Six Defaults This Week Push The 2020 Default Tally To 51

The 2020 global corporate default tally reached 51 this week after six defaults. The defaulters included: Turkish technology provider Vestel Elektronik Sanayi Ve Ticaret A.S., Chicago-based printing and digital media company LSC Communications Inc., Toledo, Ohio-based glass products manufacturer and marketer Libbey Inc., UAE-based healthcare service provider NMC Health PLC, Luxembourg-based satellite provider Intelsat S.A., and one confidential issuer.

As of April 14, there have been 1,208 issuers with rating actions impacted by COVID-19 and/or oil prices globally, including more than580 downgrades. Two out of six defaults this week were from the media and entertainment sector, which has seen numerous negative rating actions since the beginning of the pandemic. Advertising is the primary revenue source and highly correlated with changes in deteriorating economic conditions for this sector. While it's far too early to assess how the pandemic will affect overall consumer confidence and spending worldwide, advertisers have already begun to pull back on marketing plans in response (compounded by the lack of in-store spending due to social distancing measures). Though ad-based companies may not yet be subject to repercussions, S&P Global Ratings believes they'll eventually feel the pain.

—Read the full report from S&P Global Ratings

Credit FAQ: Sovereign Ratings And The Effects Of The COVID-19 Pandemic

As the COVID-19 pandemic continues, the world's economies are battling the financial and economic effects of the disease, which have brought most markets around the world to an almost complete standstill. This unprecedented set of circumstances is testing the capacity of governments around the world to provide the support needed for the private sector through this time of severe shock. In this context, governments of all sizes and with different capabilities have embarked on what is likely to be the largest monetary and fiscal stimulus since the end of World War II.

In this FAQ, S&P Global Ratings answers questions on the possible impact on sovereign ratings as we incorporate the effects of the pandemic, their policy responses, and their capacity to recover.

—Read the full FAQ from S&P Global Ratings

For first time since 2008, a CLO triggers its senior overcollateralization test

For the first time since the 2008 financial crisis, a collateralized loan obligation (CLO) has failed not only its junior but also its senior overcollateralization tests, according to BofA Securities researchers, reflecting the impact of record loan downgrades on the asset class.

Apex 2015-2, a CLO from Jefferies Finance priced in September 2015, is failing overcollateralization tests on the BB, BBB, A, and AA tranches. Overcollateralization tests are designed to ensure that the principal value of a CLO's loan portfolio exceeds the principal value of its issued debt. Broadly speaking, as the market value of a CLO portfolio declines, overcollateralization tests are triggered sequentially from the bottom of the capital stack, and redirect cashflows from junior debtholders to the AAA investor.

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

As glory days recede, fashion and luxury companies face a reboot challenge

The global luxury and fashion industries have been dealt a massive coronavirus blow that is affecting both the demand and supply sides of their business, a historic disruption that will require them to reboot their operations once the pandemic fades.

Demand from Chinese consumers, who accounted for 90% of global luxury market growth in 2019, has fallen sharply. Many factories that employ tens of thousands of workers who make shoes, handbags and scarves in Italy, France and parts of Asia are at a standstill under government-imposed lockdowns. Thousands of stores in the U.S., Europe and Asia are temporarily shuttered. And worried consumers, faced with lost jobs and strained finances, are buying fewer luxury items online.

On April 16, LVMH Moët Hennessy - Louis Vuitton Société Européenne, the world's biggest luxury goods company and owner of Louis Vuitton and Christian Dior, was one of the first to provide a glimpse into the destruction wrought by the viral outbreak. The French company reported a 15% decline in its first-quarter revenue and said it would cut its 2019 dividend by 30%.

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

OIL & ENERGY MARKETS

Saudi Aramco's Asian crude customers to get full May volumes despite OPEC+ cuts

Customers of Saudi Arabian crude will receive their allotted May volumes in full, signalling the world's largest oil exporter is unlikely to reduce volumes to its Asian refiners despite a production cut agreement earlier this month, industry sources told S&P Global Platts Friday.

The OPEC+, a coalition of OPEC and other oil producers, on Sunday agreed to whittle down production by 9.7 million b/d over May and June after oil prices plunged to near 18-year lows. According to several refinery sources, May crude allocations from Saudi Arabia are largely finalized, with several refiners reporting that state oil giant Aramco has confirmed delivery of the crude volumes they had requested for May nominations. At least one Japanese refiner confirmed there was no allocation supply cut for May loadings as requested, a company source said. Refinery sources in Singapore, China and Taiwan reported similar statements to Platts on Friday.

—Read the full article from S&P Global Platts

PODCAST OF THE DAY

Listen: Oil products struggle as IEA slashes refinery throughput forecast

Oil products are succumbing to record breaking lows, with jet cracks entering record-breaking and negative territory, and refineries are presented with complex decisions as a result of COVID-19. Senior refining reporter Elza Turner and middle distillate specialist Gary Clark discuss with Joel Hanley product margins and the options before refiners.

—Share the Global Oil Markets podcast from S&P Global Platts

Drilling, oilfield services companies buckle up for bumpy Q1'20 earnings season

As oilfield services bellwether Schlumberger Ltd. reports its first-quarter earnings April 17, the broader oil and gas industry will be listening closely to hear just how bad it is in the oil patch. First-quarter earnings by oilfield equipment and services providers will reflect mounting struggles as activity by their customers — the exploration and production sector — drops sharply due to demand erosion and crude oil price weakness. Those with healthy balance sheets, free cash flow and scalable operations to navigate the current market will fare better, but most of them will still need to address their dividend payments, analysts said.

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

Tankers: Waning onshore storage avails render floating storage best option

Crude oil storage facilities on land and on water are filling fast amid ongoing overproduction of 10 million b/d, leaving the global tanker market to make up for excess supply. "Cuts are nowhere near enough to counter the 20 million b/d demand destruction," Erik Broekhuizen, head of Tanker Research & Consulting at Poten & Partners said in a webinar Friday. Crude tanker rates are expected to remain strong until oil demand surpasses output and a destocking cycle begins, he explained.

OPEC expects global oil pandemic demand destruction of 6.8 million b/d year on year in 2020 to 92.82 million b/d, with April seeing the largest downturn at about 20 million b/d, according to its latest monthly oil market report.

—Read the full article from S&P Global Platts

Coronavirus could change travel behavior forever, putting 3 million b/d oil demand at risk

Global air, road and rail travel have been massively reduced as governments attempt to limit the spread of coronavirus, taking a heavy toll on short-term oil demand. Clearly, the mandated restrictions will lift when the pandemic eases and low oil prices will further aid in stimulating oil demand. However, it is possible that consumer behavior could be altered structurally, with impacts that persist even once the pandemic has ended. For oil demand, the two sectors most at risk from a potential change in behavior are light-duty transportation and aviation. For light duty transportation, a key risk is reduced oil demand from fewer workers commuting if there is a structural shift toward sworking from home. After mandated restrictions are lifted, businesses may question the cost of physical offices and offer more flexible working from home arrangements or even mandate employees to work from home.

—Read the full article from S&P Global Platts

From the chaos of the coronavirus pandemic can come a new order for LNG markets

Amid the coronavirus outbreak, the ephemeral nature of energy markets makes it difficult to offer certainty regarding our mainstays of forecasting: supply, demand, inventory, or price. How much the new normal will be different from the old normal will not be revealed anytime soon, but in the case of global gas and LNG markets, it’s constructive to focus on structural problems that existed well before anyone ever heard of “social distancing.” In gas markets, the problems heading into the coronavirus era were the same we will have as we leave it – the lack of demand growth and the problematic role of long-term contracts in the future of the gas business. Here’s where we can make lemonade out of lemons and create opportunity out of adversity.

—Read the full article from S&P Global Platts

ESG IN THE TIME OF COVID-19

US EPA rescinds legal basis for Obama-era mercury rule targeting power plants

Despite the objections of public health advocates and even the U.S. electric industry, the US Environmental Protection Agency April 16 released a final rule rescinding the legal basis for the Obama-era Mercury and Air Toxics Standards. Importantly, the rule also signals the EPA's intent to give less weight to the side or co-benefits of a proposed action when conducting future rulemakings.

Also known as the MATS rule, the 2012 regulation drove a wave of coal plant retirements by requiring those units to either retrofit with mercury-curbing pollution control technologies or shut down. Since the MATS rule was first proposed in 2011, power sector mercury emissions have plummeted nearly 82%, according to EPA data.

On a press call with reporters, EPA Administrator Andrew Wheeler framed the final regulation as an effort to correct "technical flaws" in the Obama administration's supplemental finding currently before the D.C. Circuit ⁠while leaving the underlying MATS standards in place. "Let me be clear, under this action no more mercury will be emitted into the air than before," Wheeler said. "Anyone suggesting so is either purposefully misreading this action or simply does not understand it." Nevertheless, the final rule was swiftly denounced by utilities and environmental groups alike, who suggested it could do just that.

—Read the full article from S&P Global Platts

Coronavirus has accelerated energy transition by a decade: Wartsila

European responses to the coronavirus have accelerated the electricity system transition by a decade, proving systems can cope with high levels of renewable energy generation, according to analysis Friday by Finnish power engineering firm Wartsila. Coal-fired generation fell 25.5% across the EU and the UK in the first three months of 2020 versus 2019, while renewable energy accounted for a 43% share in the generation mix, according to system data gathered by Wartsila's new Energy Transition Lab. The impact was accentuated in the month to April 10, coal generation down 29% on year, accounting for just 12% of EU and UK generation, while renewables delivered 46% of generation — an increase of 8% on 2019.

—Read the full article from S&P Global Platts

Why the next recession will not break the world's largest carbon market

A decade after the financial crisis crashed Europe's cap-and-trade emissions prices, experts say the reforms made will hold up against the current coronavirus crisis. Set up in 2005, the EU Emissions Trading System, or ETS, is the world's largest carbon market and Europe's flagship tool to force companies to cut their emissions efficiently. It covers around 45% of the bloc's total emissions, produced by more than 11,000 installations, including power stations and heavy industrial plants, as well as flights between EU countries. Companies receive a certain amount of allowances for free and buy the rest in regular auctions, or from each other, to cover their needs for any given year.

Following the economic shock of the global financial crisis, an oversupply led prices under the ETS to languish at a low level for almost a decade. The coronavirus has a similar impact, sending prices for emission allowances, called EU allowances or EUAs, about 40% lower in mid-March as industrial production shut down, power demand contracted and flights remained grounded. Although prices have recovered slightly since then, analysts expect more downside could be on the horizon. But experts on the carbon market say the latest economic shock will not impact the ETS as it did a decade ago, even though the IMF now expects the coronavirus recession to be far worse than in 2009. That is because of both concrete measures taken to avoid a repeat of the ETS price crash, as well as the EU's long-term climate ambitions.

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

Berry Global steps up production of medical face masks on COVID-19 demand

Berry Global has added capacity for polypropylene resin melted into fibers for specialized medical face masks in the US and Europe to help meet ever-increasing demand amid global coronavirus pandemic responses. The Indiana-based plastic packaging manufacturer said late Thursday it has added meltblown capacity at its Waynesboro, Virginia, facility, converting a pilot line into one that provides full commercial output.

Demand for medical masks has surged across the globe, particularly those made with nonwoven polypropylene fibers that block infectious droplets better than cloth or other woven fibers. Those N95 and N99 masks are in high demand for doctors, nurses and other medical professionals treating and testing coronavirus patients. Such production requires specialized machines that melt resin into very thin fibers that are combined into nonwoven material.

—Read the full article from S&P Global Platts

ASIA-PACIFIC

CHART OF THE DAY

Economic Research: Up Next: The Complicated Transition From COVID-19 Lockdown

Asia-Pacific's Forecast Climb Back From COVID-19
Distribution of real GDP forecasts relative to trend across 14 Asia-Pacific economies

^{Note: Output relative to the long-run pre-COVID-19 trend. Forecasts for 2024 and 2025 are illustrative. Source: S&P Global Economics.
Copyright © 2020 by Standard & Poor's Financial Services LLC. All rights reserved.}

There are no short cuts, no silver bullets to help us understand what the human and economic price of the COVID-19 pandemic will be. Only with experience and data can we learn the key lessons, among them: how long lockdowns need to last, how economies can reopen before a lasting medical solution is found, and what lasting imprint this episode will leave across the global economy. Tracking this crisis requires constant updating of assumptions and models to help us understand what the broad contours of pandemic will look like over the coming years.

S&P Global Ratings has revised Asia-Pacific growth to 0.3% for 2020 from 4.8% before the pandemic emerged. Compared with a year ago, the peak decline will be during the second quarter, at -1.1%, which would mark the first time the region's economy, in aggregate, has shrunk for at least four decades. S&P Global Ratings' forecasts now imply a loss in household and corporate income of about US$2.2 trillion, which will be distributed across balance sheets. S&P Global Ratings expects the level of activity, for the region as a whole, to get close to the pre-COVID-19 trend by 2023. The U-shape is getting flatter. Risks remain on the downside and we are watching the labor market closely.

—Read the full report from S&P Global Ratings

China sees sharp COVID-led GDP contraction, but commodity trends indicate a return to business

As the global economy battles the deadly COVID-19 pandemic, all eyes are on China and the rate at which its economy returns to business. China on Friday reported a contraction of 6.8% in its Q1 GDP and all data pointed to the deepest quarterly year-on-year contraction since the reform era began in the late 1970s. But some key Q1 economic indicators such as fixed-asset investment, industry production, and completed building floor space suggest that economic activity improved in March from January-February.

China's fixed asset investment fell by 16.1% year on year over January-March, compared with a drop of 24.5% in the first two months of the year. Meanwhile, floor space of buildings completed, an important indicator for aluminum consumption, came up to 155.57 million sq m over January-March, down 15.8% from a year earlier. The drop was 7.1 percentage points less than that in the first two months of the year. Industry production fell 1.1% year on year in March, 12.4 percentage points less than the decline in January-February. Commodity trends as observed by S&P Global Platts also indicate that the country is slowly but surely returning to business as usual.

—Read the full article from S&P Global Platts

China Banks After COVID-19: Big Get Bigger, Weak Get Weaker

As COVID-19 retreats in China, with the numbers of new daily cases stabilizing at double digits, the country's banking system is surveying the damage. The crisis will test lenders' resilience with more than a 50% increase in nonperforming assets likely in 2020 amid a halving in Chinese GDP growth. S&P Global Ratings expects the outbreak will exaggerate the pecking order of Chinese banks. Regional lenders with a high exposure to small enterprises will be hit hardest, while the biggest banks will likely come through the turmoil with enhanced market position.

—Read the full report from S&P Global Ratings

Analysis: China, the only respite for crude sellers

As the world faces unprecedented destruction in oil demand brought about by the coronavirus pandemic, China has in recent weeks emerged to be the only respite for crude sellers seeking to offload their cargoes, market sources told S&P Global Platts this week. Chinese refineries have been ramping up run rates as travel restrictions are eased and lockdowns lifted within the country, allowing manufacturing and production to gradually resume since late March, the sources said.

In April, China's planned crude run for the month was expected to recover to about 12.5 million b/d, taking nearly two months to reach about 90% of the level achieve in January after falling by about 3.3 million b/d in February, S&P Global Platts' survey showed. The throughput recovery is expected to lower the current crude inventory and free up more tanks to store cheaper crudes, while waiting for China's product demand to emerge from the bottom. As a result, crude imports are expected to rise above 10 million b/d in the coming months from the eight-month low of 9.7 million b/d in March, a Beijing-based analyst said.

—Read the full article from S&P Global Platts

EUROPE

Banks under fire for delays in state-backed loan scheme as UK widens its scope

The British government has expanded its coronavirus business loan scheme to include bigger companies amid calls from the banking industry for it to provide 100% guarantees for loans. U.K. Finance Minister Rishi Sunak extended the existing scheme so that companies with a turnover of more than £45 million will be able to apply for up to £25 million of finance, while those with a turnover of more than £250 million will be eligible for up to £50 million in funding. Under the scheme the government guarantees 80% of the loan banks still carry the remaining 20% of the risk.

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

Coronavirus could derail Greek banks' bad-debt reduction plans

Greek banks can expect the novel coronavirus outbreak to deal a blow to their ongoing efforts to reduce portfolios of toxic assets, analysts say. Only just a few months ago, the signs of an economic recovery were encouraging as was a new government scheme to encourage bad-debt securitizations. Greek banks had good reason to be hopeful that 2020 would be the year that they would at long last make deep reductions to the bad debts that piled up on their balance sheets during the financial crisis of 2008-2009. But that was before the pandemic hit.

Greece, which imposed a social lockdown March 22 to combat the virus, has reported relatively few COVID-19 fatalities, at 101 as of April 14. But the prospect of a prolonged economic downturn is leaving the country bracing for another period of financial pain. For Greek banks, a prolonged period of coronavirus fallout could be a double whammy as not only would their soured-asset reduction plans come under pressure, but they also could be faced with a new wave of defaults.

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

Banks face elevated money-laundering risks amid coronavirus crisis

A hike in coronavirus-related financial crime is presenting new challenges for banks, which could face significant reputational and regulatory repercussions if they are found to have acted unethically during the crisis, regulation and compliance experts warn. As business operations are disrupted and opportunistic fraudsters seek to take advantage of the coronavirus outbreak, it is becoming more complicated and challenging for banks to identify bad actors and suspicious transactions. The U.K.'s national crime agency warned March 26 that "criminals are exploiting the COVID-19 pandemic to scam people" and that "this is only likely to increase." This includes a rise in cyberattacks and online shopping scams where fraudsters sell nonexisting medical supplies or fake testing kits.

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

COVID-19: Coronavirus-Related Public Rating Actions On Nonfinancial Corporations And Affected European CLOs

In response to investors' growing interest in the COVID-19 coronavirus and its credit effects on companies and European collateralized loan obligations (CLOs), S&P Global Ratings is publishing a regularly updated list of rating actions taken globally on nonfinancial corporations, which have had an effect on European CLOs, and a summary table. These are public ratings where S&P Global Ratings mentions the COVID-19 coronavirus as one factor or in combination with others.

—Read the full report from S&P Global Ratings

NORTH AMERICA

COVID-19 Market Volatility Tests North American Reinsurers' Resilience

COVID-19 has brought the global economy to a screeching halt, spurring unprecedented financial market volatility and policy responses. S&P Global Ratings' investment stress tests have shown that almost all of its rated North American reinsurers are able to maintain capital adequacy in line with the ratings for now. North American reinsurers are carrying thinner capital buffers than in the past. Therefore, those with riskier investment strategies and outsize natural catastrophe exposure are at risk if market losses intensify and 2020 ends up being an above-average catastrophe year. S&P Global Ratings will likely take negative rating actions if COVID-19 becomes a capital event and reinsurers aren't able to rebuild their capitalization over the next 12-24 months.

—Read the full report from S&P Global Ratings

U.S. CMBS Conduit Update Q1 2020: The Magnitude Of COVID-19 Fallout Remains Uncertain

S&P Global Ratings will continue to monitor COVID-19's impact on the U.S. CMBS transactions S&P Global Ratings rates, especially those with lodging and retail exposures, and take individual rating actions, as appropriate. U.S. CMBS new issue credit metrics generally improved in the first quarter, though interest-only loans increased considerably, while lodging and retail exposures rose quarter over quarter. S&P Global Ratings' analysis of the transactions we rated in 2019 revealed noticeable differences in our LTV ratios for the five largest loans in the collateral pools versus the remaining loans.

—Read the full report from S&P Global Ratings

Credit FAQ: What's Behind S&P Global Ratings' Actions On Certain Caribbean And North Atlantic Sovereigns?

S&P Global Ratings recently reviewed its ratings on 10 tourism-dependent sovereigns in the Caribbean and North Atlantic, as the spread of the COVID-19 pandemic, together with the sudden stop in tourism, will cause unprecedented declines in GDP, fiscal balances, and foreign exchange inflows. Although there is a high degree of uncertainty about the rate of spread and the peak of the coronavirus outbreak, S&P Global Ratings' base case for tourism in the region in 2020 assumes a year-over-year decline of 60%-70% from April to December, with the largest declines occurring in the second and third quarters.

—Read the full report from S&P Global Ratings

Marriott, Hilton provide COVID-19 updates; WeWork to slash more jobs

Marriott International Inc., which has already pulled back its 2020 guidance, said it expects the pandemic to continue to impact its business, operations and financial results, anticipating the impact to "worsen and last for an unknown period of time." The global hospitality company said the "complex and rapidly-evolving" pandemic is expected to adversely impact its ability to raise funds via equity financings, among other risks to its business.

Embattled coworking giant and The We Co. unit WeWork Cos. Inc. will be making additional job cuts by the end of May, following the axing of about 2,400 jobs in late 2019, Bloomberg News reported, citing an audio recording of a staff meeting. CEO Sandeep Mathrani said the job-cutting round will potentially be the last, but did not disclose the size of the planned layoffs.

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

Full impacts of COVID-19 shutdown on utilities, power markets still to come

Utilities' relatively decent performance in the first month of the coronavirus-triggered economic shutdown will not last forever and may not last long, an April 14 report from the Brattle Group Inc. warns. As of the end of March and "relative to the depth of impact on the health system and employment there has only been a dampened or, more likely, lagged visible effect of COVID-19 on utility industry market conditions, partly owing to the essentiality of utility service," the Cambridge, Mass.-based consulting firm said. "However, this lagged effect cannot be counted on to last indefinitely or even far into the near term."

Utility stock prices have fallen nearly as much as the overall stock market since early March, noted Brattle, decreasing 10.9% versus the S&P 500's 11.0% decline between March 2 and April 8. "In general, values for all sectors of the economy have moved more in parallel than normally," which could suggest that "some investors question utilities' ability to recover lost revenues." The economic downturn more broadly will impact utilities' cost of capital, liquidity, hedging and possibly capital expenditure programs, as well as the timing and choices in integrated resource plans.

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

Utility regulators have 'no rules of the road' for addressing coronavirus

The coronavirus pandemic has presented utility regulators with a set of obstacles they have never before confronted, challenging them to adapt regulatory tools to balance the interests of ratepayers struggling through unemployment and gas distributors juggling unanticipated costs and lost revenues. Analysts say the proliferation of new regulatory mechanisms since the Great Recession will help smooth out revenue and cost swings that would otherwise require new rate cases. But industry watchers nevertheless expect regulators to preside over extraordinary proceedings where utilities and consumer advocates vie for their interests on a largely unmapped battlefield.

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

Written and compiled by Molly Mintz.