As possible financial Armageddon looms in the shape of warring American politicians, many are asking what happens if the worst - a default by the US on its debt - is avoided, but the country still loses its prized triple-A credit rating?
By Valens Credit:Moody's Baa2 credit rating for Best Buy Co., Inc. (NYSE:BBY) overstates the company's fundamental credit risk. BBY's fundamentals show strong cash flows that exceeds all operating obligations by 30% each year. The firm also shows substantial liquidity from its revolving loan and a robust recovery rate. The risk of default is not high, with little concern that the company needs to refinance debt.
By Valens Credit:Moody's deep junk B3 credit rating for Navistar (NYSE:NAV) is grossly overstating NAV's fundamental credit risk. NAV's fundamentals show growing cash flows and sizable cash balances that far exceed its operating obligations and debt service requirements by approximately $1 billion for each of the next five years.
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) stock gained 4.4% to $7.06 on Friday before market close. Some analysts attribute the increase to expectations of the stock being a short-squeeze candidate, as the stock closed in the green for the third consecutive trading day.
Investors are losing confidence Canadian gold miners will be able to weather the worst price slump in four years without damage to their credit ratings.
Canadians tied with Mexican issuers for the worst returns in October in a global index of metals, miners and steel companies, gaining 0.4% compared with an average 1%, according to Bank of America Merrill Lynch data. Barrick Gold Corp.’s 4.1% notes due May 2023 have fallen to $96, a decline of $3 since last week.
WASHINGTON (AP) — Most Americans think jarring economic problems will erupt if lawmakers fail to increase the government's borrowing limit. Yet they're torn over how or even whether to raise it, leaning toward Republican demands that any boost be accompanied by spending cuts. According to an Associated Press-GfK poll, 53 percent say that if the debt limit is not extended and the U.S. defaults, the country will face a major economic crisis. An additional 27 percent say such a crisis would be somewhat likely, while just 17 percent largely dismiss the prospects of such damage.
By Plan B Economics:It may not happen next week, but it will happen. It appears that Japan is on an unstoppable path to financial Armageddon.Over the past 20+ years, the Japanese economy has unwound the excesses caused by a giant property and financial bubble. At the same time, the country's aging demographics has increased social costs while the pool of taxable labor declined. Consequently, Japan has stagnated and repeatedly dipped into deflation.