|
Report Date : |
08.04.2013 |
IDENTIFICATION DETAILS
|
Name : |
METTLER-TOLEDO INTERNATIONAL INC. |
|
|
|
|
Registered Office : |
1900 Polaris Parkway, Columbus, OH 43240 |
|
|
|
|
Country : |
United States |
|
|
|
|
Financials (as on) : |
31.12.2012 |
|
|
|
|
Date of Incorporation : |
06.12.1991 |
|
|
|
|
Legal Form : |
Public Company |
|
|
|
|
Line of Business : |
Subject supplies precision instruments and services worldwide |
|
|
|
|
No. of Employees : |
12400 |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
|
|
|
|
Payment Behaviour : |
No Complaints |
|
|
|
|
Litigation : |
Clear |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30th, 2012
|
Country Name |
Previous Rating (31.03.2012) |
Current Rating (30.06.2012) |
|
United
States |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
United States - ECONOMIC OVERVIEW
The US has the largest and most technologically powerful economy in the world,
with a per capita GDP of $48,100. In this market-oriented economy, private
individuals and business firms make most of the decisions, and the federal and
state governments buy needed goods and services predominantly in the private
marketplace. US business firms enjoy greater flexibility than their
counterparts in Western Europe and Japan in decisions to expand capital plant,
to lay off surplus workers, and to develop new products. At the same time, they
face higher barriers to enter their rivals' home markets than foreign firms
face entering US markets. US firms are at or near the forefront in
technological advances, especially in computers and in medical, aerospace, and
military equipment; their advantage has narrowed since the end of World War II.
The onrush of technology largely explains the gradual development of a
"two-tier labor market" in which those at the bottom lack the
education and the professional/technical skills of those at the top and, more
and more, fail to get comparable pay raises, health insurance coverage, and
other benefits. Since 1975, practically all the gains in household income have
gone to the top 20% of households. Since 1996, dividends and capital gains have
grown faster than wages or any other category of after-tax income. Imported oil
accounts for nearly 55% of US consumption. Oil prices doubled between 2001 and
2006, the year home prices peaked; higher gasoline prices ate into consumers'
budgets and many individuals fell behind in their mortgage payments. Oil prices
increased another 50% between 2006 and 2008. In 2008, soaring oil prices
threatened inflation and caused a deterioration in the US merchandise trade
deficit, which peaked at $840 billion. In 2009, with the global recession
deepening, oil prices dropped 40% and the US trade deficit shrank, as US
domestic demand declined, but in 2011 the trade deficit ramped back up to $803
billion, as oil prices climbed once more. The global economic downturn, the
sub-prime mortgage crisis, investment bank failures, falling home prices, and
tight credit pushed the United States into a recession by mid-2008. GDP
contracted until the third quarter of 2009, making this the deepest and longest
downturn since the Great Depression. To help stabilize financial markets, in
October 2008 the US Congress established a $700 billion Troubled Asset Relief
Program (TARP). The government used some of these funds to purchase equity in
US banks and industrial corporations, much of which had been returned to the
government by early 2011. In January 2009 the US Congress passed and President
Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus
to be used over 10 years - two-thirds on additional spending and one-third on
tax cuts - to create jobs and to help the economy recover. In 2010 and 2011,
the federal budget deficit reached nearly 9% of GDP; total government revenues
from taxes and other sources are lower, as a percentage of GDP, than that of
most other developed countries. The wars in Iraq and Afghanistan required major
shifts in national resources from civilian to military purposes and contributed
to the growth of the US budget deficit and public debt - through 2011, the
direct costs of the wars totaled nearly $900 billion, according to US
government figures. In March 2010, President OBAMA signed into law the Patient
Protection and Affordable Care Act, a health insurance reform bill that will
extend coverage to an additional 32 million American citizens by 2016, through
private health insurance for the general population and Medicaid for the
impoverished. Total spending on health care - public plus private - rose from
9.0% of GDP in 1980 to 17.9% in 2010. In July 2010, the president signed the
DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote
financial stability by protecting consumers from financial abuses, ending
taxpayer bailouts of financial firms, dealing with troubled banks that are
"too big to fail," and improving accountability and transparency in
the financial system - in particular, by requiring certain financial
derivatives to be traded in markets that are subject to government regulation
and oversight. Long-term problems include inadequate investment in
deteriorating infrastructure, rapidly rising medical and pension costs of an aging
population, sizable current account and budget deficits - including significant
budget shortages for state governments - energy shortages, and stagnation of
wages for lower-income families.
|
Source : CIA |
Your order on: METTLER-TOLEDO CI-VISION INSPECTION
This
name is not registered.
The correct
corporate name is:
Company name: METTLER-TOLEDO INTERNATIONAL INC.
Address: 1900 Polaris Parkway, Columbus, OH
43240 - USA
Telephone: +1
614-438-4511
Fax: +1 614-438-4646
Website: www.us.mt.com
Corporate ID#: 2281086
State: Delaware
Judicial form: Public Company (NYSE = MTD)
Date incorporated: December 6, 1991
Stock: 30,305,383
shares issued and outstanding (as of 01-31-2013)
Value: USD 0.01= par value
Name of
manager: Olivier A. FILLIOL
Business:
Mettler-Toledo International Inc. supplies precision instruments and
services worldwide.
The company operates in five segments: U.S. Operations, Swiss
Operations, Western European Operations, Chinese Operations, and Other.
It offers weighing instruments for use in laboratory, industrial,
packaging, logistics, and food retailing applications; analytical instruments
for use in life science; automated chemistry solutions used in drug and
chemical compound discovery and development; and metal detection and other
end-of-line inspection systems used in production and packaging for food,
pharmaceutical, and other industries.
Its laboratory instruments include laboratory balances, pipettes,
titrators, thermal analysis systems, and other analytical instruments comprising
pH meters, density and refractometry instruments, moisture analyzers, as well
as laboratory software, automated chemistry solutions, and process analytic
instruments.
The company’s industrial solutions comprise industrial weighing
instrument, industrial terminals, automatic identification and data capture
solutions, vehicle scale systems, industrial software, and product inspection
systems. Its retail solutions consist of multiple weighing and food labeling
solutions, such as stand-alone scales, and networked scales and software for
handling fresh goods, such as meats, vegetables, fruits, and cheeses.
The company serves the life science industry covering pharmaceutical and
biotechnology companies, and independent research organizations; food and
beverage producers; food retailers; chemical, specialty chemical, and cosmetics
companies; transportation and logistics, metals, and electronics industries;
and the academic community.
It markets its products through its direct sales force, as well as through
indirect distribution channels.
Mettler-Toledo International Inc. was founded in 1991 and is based in
Columbus, Ohio.
EIN: 13-3668641
Staff: 12,400
Operations & branches:
At the headquarters, we
find
The Company has a manufacturing presence in Europe, the United States
and China.
In the U.S., the Company
maintains several branches including the one located:
2640 White Oak Circle, Ste
A
Aurora, IL 60502
Ph: 630-446-7700
Shareholders:
The Company is listed with
the NYSE under symbol MTD.
As of 12-31-2012, 99% of
the stock was held by institutional and mutual fund owners, including:
|
Fidelity Contrafund Inc |
7.78% |
|
Columbia Wanger Asset Management, L.P. |
7.30% |
|
Columbia Acorn Fund |
5.29% |
|
BAMCO Inc. |
5.04% |
|
Vanguard Group, Inc. (The) |
4.87% |
|
Artisan Partners Limited Partnership |
4.28% |
Management:
Olivier A. FILLIOL is the President, Director and CEO
Mr. Olivier A. Filliol has been the Chief Executive Officer and
President of Mettler-Toledo International Inc. and Mettler-Toledo Ltd. since
January 01, 2008. Mr. Filliol served as the Head of Global Sales, Service and
Marketing at Mettler-Toledo International Inc. and Mettler-Toledo Ltd. from
April 2004 to December 2007 and their Head of Process Analytics from June 1999
to December 2007. He was responsible for Mettler-Toledo International, Inc.'s
Global Sales, Service and Marketing operations, as well as its operations in
China. From June 1998 to June 1999, Mr. Filliol served as General Manager of
Hi-Speed Checkweigher Inc., a subsidiary of Mettler-Toledo International Inc.
He served as a Strategy Consultant with the international consulting
firm Bain & Company working in the Geneva, Paris, London and Sydney
offices.
Mr. Filliol has been a Director of Mettler-Toledo International, Inc.
and Mettler-Toledo Ltd. since January 01, 2009.
Mr. Filliol has a Masters and Ph.D. in Business Administration from the
University of St. Gallen, Switzerland and has completed executive education at
the Business School of Stanford University.
William P. DONNELLY is the CFO.
Subsidiaries and
partnership:
|
Australia |
|
Mettler-Toledo Limited |
|
Australia |
|
Ohaus Australia Pty. Ltd. |
|
Austria |
|
Mettler-Toledo Ges.m.b.H. |
|
Belgium |
|
N.V. Mettler-Toledo |
|
Bermuda |
|
Mettler-Toledo Finance Ltd. |
|
Brazil |
|
Mettler-Toledo Indústria e Comércio Ltda. |
|
Canada |
|
Mettler-Toledo Inc. (Canada) |
|
China |
|
Mettler-Toledo (Changzhou) Precision Instruments Ltd. |
|
China |
|
Mettler-Toledo (Changzhou) Scale & System Ltd. |
|
China |
|
Mettler-Toledo (Changzhou) Measurement Technology Ltd. |
|
China |
|
Mettler-Toledo Instruments (Shanghai) Co., Ltd. |
|
China |
|
Mettler-Toledo International Trading (Shanghai) Co., Ltd. |
|
China |
|
Mettler-Toledo (Xinjiang ) Electronic Scale Ltd. |
|
China |
|
Ohaus International Trading (Shanghai) Co., Ltd. |
|
China |
|
Ohaus Instruments (Shanghai) Co. Ltd. |
|
China |
|
Ohaus Instruments (Changzhou) Co. Ltd. |
|
China |
|
Panzhihua Toledo Electronic Scale Ltd. (Panzhihua) |
|
China |
|
Mettler-Toledo (Chengdu) Scale & System Ltd. |
|
Croatia |
|
Mettler-Toledo d.o.o. |
|
Czech Republic |
|
Mettler-Toledo spol. s.r.o. |
|
Denmark |
|
Mettler-Toledo A/S |
|
France |
|
Mettler-Toledo EPEC SAS |
|
France |
|
Mettler-Toledo Analyse Industrielle SAS |
|
France |
|
Mettler-Toledo Holding (France) SAS |
|
France |
|
Mettler-Toledo SAS |
|
Germany |
|
Mettler-Toledo Garvens GmbH |
|
Germany |
|
Getmore Ges. für Marketing & Media Service mbH |
|
Germany |
|
Mettler-Toledo (Albstadt) GmbH |
|
Germany |
|
Mettler-Toledo GmbH |
|
Germany |
|
Mettler-Toledo Management Holding Deutschland GmbH |
|
Germany |
|
Pharmacontrol Electronic GmbH |
|
Germany |
|
Melibokus Industrie-Elektronik GmbH |
|
Gibraltar |
|
Mettler-Toledo (Gibraltar) MTCS Holding Ltd. |
|
Gibraltar |
|
Mettler-Toledo (Gibraltar) MTCN Holding Ltd. |
|
Gibraltar |
|
Mettler-Toledo (Gibraltar) MTCZ Holding Ltd. |
|
Gibraltar |
|
Mettler-Toledo (Gibraltar) Company Ltd. |
|
Hong Kong |
|
Mettler-Toledo (HK) Ltd. |
|
Hong Kong |
|
Mettler-Toledo (HK) Holding Limited |
|
Hong Kong |
|
Mettler-Toledo (HK) MTCN Limited |
|
Hong Kong |
|
Mettler-Toledo (HK) MTCS Limited |
|
Hong Kong |
|
Mettler-Toledo (HK) MTCZ Limited |
|
Hong Kong |
|
Ohaus (Hong Kong) Limited |
|
Hungary |
|
Mettler-Toledo Kereskedelmi Kft. |
|
India |
|
Mettler-Toledo India Private Limited |
|
India |
|
Ohaus Weighing India Private Limited |
|
Italy |
|
Mettler-Toledo S.p.A. |
|
Japan |
|
Mettler-Toledo K.K. |
|
Kazakhstan |
|
Mettler-Toledo Central Asia |
|
Kazakhstan |
|
Mettler-Toledo Kazakhstan |
|
Korea |
|
Mettler-Toledo (Korea) Ltd. |
|
Luxembourg |
|
Mettler-Toledo Luxembourg S.ŕ r.l. |
|
Malaysia |
|
Mettler-Toledo (M) Sdn. Bhd. |
|
Malaysia |
|
Mettler-Toledo Services Asia-Pac Sdn. Bhd. |
|
Malaysia |
|
Ohaus (SEA) Sdn. Bhd. |
|
Mexico |
|
Mettler-Toledo S.A. de C.V. |
|
Mexico |
|
Ohaus de México S.A. de C.V. |
|
Netherlands |
|
Gelan Detectiesystemen B.V. |
|
Netherlands |
|
Gelan Holding B.V. |
|
Netherlands |
|
Mettler-Toledo B.V. |
|
Netherlands |
|
Mettler-Toledo Product Inspection B.V. |
|
Norway |
|
Mettler-Toledo Cargoscan AS |
|
Norway |
|
Mettler-Toledo AS |
|
Poland |
|
Mettler-Toledo Sp.z.o.o. |
|
Russian Federation |
|
ZAO Mettler-Toledo Vostok |
|
Russian Federation |
|
Representation Office (Part of MTG) |
|
Singapore |
|
Mettler-Toledo (S) Pte. Ltd. |
|
Slovak Republic |
|
Mettler-Toledo s.r.o. |
|
Slovenia |
|
Mettler-Toledo d.o.o. |
|
Spain |
|
Mettler-Toledo S.A.E. |
|
Sweden |
|
Mettler-Toledo AB |
|
Switzerland |
|
Mettler-Toledo (Schweiz) GmbH |
|
Switzerland |
|
Mettler-Toledo AG |
|
Switzerland |
|
Mettler-Toledo Holding AG |
|
Switzerland |
|
Mettler-Toledo Instrumente AG |
|
Switzerland |
|
Mettler-Toledo International Inc. |
|
Switzerland |
|
Mettler-Toledo Logistik GmbH |
|
Switzerland |
|
Mettler-Toledo Logistik International GmbH |
|
Switzerland |
|
Mettler-Toledo Pac Rim AG |
|
Switzerland |
|
Mettler-Toledo OnLine GmbH |
|
Switzerland |
|
Microwa AG |
|
Switzerland |
|
Ohaus Europe GmbH |
|
Taiwan |
|
Mettler-Toledo Pac Rim AG, Taiwan Branch |
|
Thailand |
|
Mettler-Toledo (Thailand) Ltd. |
|
Thailand |
|
Ohaus Indochina Limited |
|
Turkey |
|
Mettler-Toledo TR Olcum Aletleri Ticaret Satis vs Servis Hizmetleri
Anonim Sirketi |
|
Ukraine |
|
Mettler-Toledo Ukraine |
|
United Kingdom |
|
Anachem Limited |
|
United Kingdom |
|
Mettler-Toledo Ltd. |
|
United Kingdom |
|
Mettler-Toledo UK Holdings Limited |
|
United Kingdom |
|
Ohaus UK Ltd. |
|
United Kingdom |
|
Mettler-Toledo Safeline X-Ray Limited |
|
United Kingdom |
|
Mettler-Toledo Safeline Limited |
|
United Kingdom |
|
Triton Technology Limited |
|
United States |
|
Mettler-Toledo AutoChem, Inc. [Delaware] |
|
United States |
|
Mettler-Toledo LLC [Delaware] |
|
United States |
|
Mettler-Toledo Ingold, Inc. [Massachusetts] |
|
United States |
|
Ohaus Corporation [New Jersey] |
|
United States |
|
Rainin Instrument, LLC [Delaware] |
|
United States |
|
Mettler-Toledo Thornton Inc. [Massachusetts] |
|
United States |
|
Mettler-Toledo International Finance, Inc. [Delaware] |
|
United States |
|
Mettler-Toledo Global Holdings, LLC [Delaware] |
|
Vietnam |
|
Mettler-Toledo Vietnam Limited Liability Company |
METTLER TOLEDO is geographically diversified with sales in 2012 derived
34% from Europe, 34% from the Americas and 32% from Asia and other countries.
|
Currency
in |
As of: |
Dec 31 |
Dec 31 |
Dec 31 |
Dec 31 |
|
Revenues |
1,728.9 |
1,968.2 |
2,309.3 |
2,341.5 |
|
|
TOTAL REVENUES |
1,728.9 |
1,968.2 |
2,309.3 |
2,341.5 |
|
|
Cost of Goods Sold |
839.5 |
931.0 |
1,091.1 |
1,100.5 |
|
|
GROSS PROFIT |
889.3 |
1,037.2 |
1,218.3 |
1,241.1 |
|
|
Selling General & Admin
Expenses, Total |
505.2 |
588.7 |
703.6 |
684.0 |
|
|
R&D Expenses |
89.7 |
97.0 |
116.1 |
112.5 |
|
|
Depreciation &
Amortization, Total |
11.8 |
14.8 |
17.8 |
21.4 |
|
|
OTHER OPERATING EXPENSES,
TOTAL |
606.7 |
700.6 |
837.6 |
817.9 |
|
|
OPERATING INCOME |
282.6 |
336.6 |
380.7 |
423.1 |
|
|
Interest Expense |
-25.1 |
-20.1 |
-23.2 |
-22.8 |
|
|
Other Non-Operating Expenses,
Total |
-1.4 |
-1.0 |
-2.4 |
-1.1 |
|
|
Other Non-Operating Income
(Expenses) |
-1.4 |
-1.0 |
-2.4 |
-4.1 |
|
|
Merger & Restructuring Charges |
-31.4 |
-4.9 |
-5.9 |
-16.7 |
|
|
Gain (Loss) on Sale of Assets |
-- |
-4.4 |
-- |
-- |
|
|
Other Unusual Items, Total |
-- |
1.2 |
-- |
-- |
|
|
EBT, INCLUDING UNUSUAL ITEMS |
224.8 |
307.5 |
349.2 |
382.6 |
|
|
Income Tax Expense |
52.2 |
75.4 |
79.7 |
91.8 |
|
|
Earnings from Continuing
Operations |
172.6 |
232.1 |
269.5 |
290.8 |
|
|
NET INCOME |
172.6 |
232.1 |
269.5 |
290.8 |
|
Banks: JPMorgan Chase Bank
Legal filings
& complaints:
As of today date, there is no legal filing pending with the Courts.
Secured debts summary (UCC):
None
Standard &
Poor’s
|
United
States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks,
Rising Debt Burden; Outlook Negative |
|
Publication
date: 05-Aug-2011 20:13:14 EST |
·
We have also removed both the short- and long-term ratings
from CreditWatch negative.
·
The downgrade reflects our opinion that the fiscal
consolidation plan that Congress and the Administration recently agreed to
falls short of what, in our view, would be necessary to stabilize the
government's medium-term debt dynamics.
·
More broadly, the downgrade reflects our view that the
effectiveness, stability, and predictability of American policymaking and
political institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a negative
outlook to the rating on April 18, 2011.
·
Since then, we have changed our view of the difficulties in
bridging the gulf between the political parties over fiscal policy, which makes
us pessimistic about the capacity of Congress and the Administration to be able
to leverage their agreement this week into a broader fiscal consolidation plan
that stabilizes the government's debt dynamics any time soon.
·
The outlook on the long-term rating is negative. We could
lower the long-term rating to 'AA' within the next two years if we see that
less reduction in spending than agreed to, higher interest rates, or new fiscal
pressures during the period result in a higher general government debt
trajectory than we currently assume in our base case.
TORONTO (Standard &
Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it
lowered its long-term sovereign credit rating on the United States of America
to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the
long-term rating is negative. At the same time, Standard & Poor's affirmed
its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's
removed both ratings from CreditWatch, where they were placed on July 14, 2011,
with negative implications.
The transfer and convertibility (T&C) assessment of the U.S.--our
assessment of the likelihood of official interference in the ability of
U.S.-based public- and private-sector issuers to secure foreign exchange for
debt service--remains
'AAA'.
We lowered our long-term
rating on the U.S. because we believe that the prolonged controversy over
raising the statutory debt ceiling and the related fiscal policy debate
indicate that further near-term progress containing the growth in public
spending, especially on entitlements, or on reaching an agreement on raising
revenues is less likely than we previously assumed and will remain a
contentious and fitful process. We also believe that the fiscal consolidation
plan that Congress and the Administration agreed to this week falls short of
the amount that we believe is necessary to stabilize the general government
debt burden by the middle of the decade.
Our lowering of the
rating was prompted by our view on the rising public debt burden and our
perception of greater policymaking uncertainty, consistent with our criteria
(see "Sovereign Government Rating Methodology and Assumptions ," June 30, 2011, especially Paragraphs
36-41). Nevertheless, we view the U.S. federal government's other economic,
external, and monetary credit attributes, which form the basis for the
sovereign rating, as broadly unchanged.
We have taken the ratings
off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment
of 2011 has removed any perceived immediate threat of payment default posed by
delays to raising the government's debt ceiling. In addition, we believe that
the act provides sufficient clarity to allow us to evaluate the likely course
of U.S. fiscal policy for the next few years.
The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective, and
less predictable than what we previously believed. The statutory debt ceiling
and the threat of default have become political bargaining chips in the debate
over fiscal policy. Despite this year's wide-ranging debate, in our view, the
differences between political parties have proven to be extraordinarily
difficult to bridge, and, as we see it, the resulting agreement fell well short
of the comprehensive fiscal consolidation program that some proponents had
envisaged until quite recently. Republicans and Democrats have only been able
to agree to relatively modest savings on discretionary spending while
delegating to the Select Committee decisions on more comprehensive measures. It
appears that for now, new revenues have dropped down on the menu of policy
options. In addition, the plan envisions only minor policy changes on Medicare
and little change in other entitlements,
the containment of which
we and most other independent observers regard as key to long-term fiscal
sustainability.
Our opinion is that
elected officials remain wary of tackling the structural issues required to
effectively address the rising U.S. public debt burden in a manner consistent
with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and
Assumptions," June 30, 2011,
especially Paragraphs 36-41). In our view, the difficulty in framing a
consensus on fiscal policy weakens the government's ability to manage public
finances and diverts attention from the debate over how to achieve more
balanced and dynamic economic growth in an era of fiscal stringency and
private-sector deleveraging (ibid). A new political consensus might (or might
not) emerge after the 2012 elections, but we believe that by then, the
government debt burden will likely be higher, the needed medium-term fiscal
adjustment potentially greater, and the inflection point on the U.S.
population's demographics and other age-related spending drivers closer at hand
(see "Global Aging 2011: In The U.S., Going Gray Will Likely
Cost Even More Green, Now,"
June 21, 2011).
Standard & Poor's
takes no position on the mix of spending and revenue measures that Congress and
the Administration might conclude is appropriate for putting the U.S.'s
finances on a sustainable footing.
The act calls for as much
as $2.4 trillion of reductions in expenditure growth over the 10 years through
2021. These cuts will be implemented in two steps: the $917 billion agreed to
initially, followed by an additional $1.5 trillion that the newly formed
Congressional Joint Select Committee on Deficit Reduction is supposed to
recommend by November 2011. The act contains no measures to raise taxes or
otherwise enhance revenues, though the committee could recommend them.
The act further provides
that if Congress does not enact the committee's recommendations, cuts of $1.2
trillion will be implemented over the same time period. The reductions would
mainly affect outlays for civilian discretionary spending, defense, and
Medicare. We understand that this fall-back mechanism is designed to encourage
Congress to embrace a more balanced mix of expenditure savings, as the
committee might recommend.
We note that in a letter
to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated
total budgetary savings under the act to be at least $2.1 trillion over the
next 10 years relative to its baseline assumptions. In updating our own fiscal
projections, with certain modifications outlined below, we have relied on the
CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to
include the CBO assumptions contained in its Aug. 1 letter to Congress. In
general, the CBO's "Alternate Fiscal Scenario" assumes a continuation
of recent Congressional action overriding existing law.
We view the act's
measures as a step toward fiscal consolidation. However, this is within the
framework of a legislative mechanism that leaves open the details of what is
finally agreed to until the end of 2011, and Congress and the Administration
could modify any agreement in the future. Even assuming that at least $2.1
trillion of the spending reductions the act envisages are implemented, we
maintain our view that the U.S. net general government debt burden (all levels
of government combined, excluding liquid financial assets) will likely continue
to grow. Under our revised base case fiscal scenario--which we consider to be
consistent with a 'AA+' long-term rating and a negative outlook--we now project
that net general government debt would rise from an estimated 74% of GDP by the
end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of
sovereign indebtedness is high in relation to those of peer credits and, as
noted, would continue to rise under the act's revised policy settings.
Compared with previous
projections, our revised base case scenario now assumes that the 2001 and 2003
tax cuts, due to expire by the end of 2012, remain in place. We have changed
our assumption on this because the majority of Republicans in Congress continue
to resist any measure that would raise revenues, a position we believe Congress
reinforced by passing the act. Key macroeconomic assumptions in the base case
scenario include trend real GDP growth of 3% and consumer price inflation near
2% annually over the decade.
Our revised upside
scenario--which, other things being equal, we view as consistent with the
outlook on the 'AA+' long-term rating being revised to stable--retains these
same macroeconomic assumptions. In addition, it incorporates $950 billion of
new revenues on the assumption that the 2001 and 2003 tax cuts for high earners
lapse from 2013 onwards, as the Administration is advocating. In this scenario,
we project that the net general government debt would rise from an estimated
74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.
Our revised downside
scenario--which, other things being equal, we view as being consistent with a
possible further downgrade to a 'AA' long-term rating--features less-favorable
macroeconomic assumptions, as outlined below and also assumes that the second
round of spending cuts (at least $1.2 trillion) that the act calls for does not
occur. This scenario also assumes somewhat higher nominal interest rates for
U.S. Treasuries. We still believe that the role of the U.S. dollar as the key
reserve currency confers a government funding advantage, one that could change
only slowly over time, and that Fed policy might lean toward continued loose
monetary policy at a time of fiscal tightening. Nonetheless, it is possible
that interest rates could rise if investors re-price relative risks. As a
result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in
10-year bond yields relative to the base and upside cases from 2013 onwards. In
this scenario, we project the net public debt burden would rise from 74% of GDP
in 2011 to 90% in 2015 and to 101% by 2021.
Our revised scenarios
also take into account the significant negative revisions to historical GDP
data that the Bureau of Economic Analysis announced on July 29. From our
perspective, the effect of these revisions underscores two related points when
evaluating the likely debt trajectory of the U.S. government. First, the
revisions show that the recent recession was deeper than previously assumed, so
the GDP this year is lower than previously thought in both nominal and real
terms. Consequently, the debt burden is slightly higher. Second, the revised
data highlight the sub-par path of the current economic recovery when compared
with rebounds following previous post-war recessions. We believe the sluggish
pace of the current economic recovery could be consistent with the experiences
of countries that have had financial crises in which the slow process of debt
deleveraging in the private sector leads to a persistent drag on demand. As a
result, our downside case scenario assumes relatively modest real trend GDP
growth of 2.5% and inflation of near 1.5% annually going forward.
When comparing the U.S.
to sovereigns with 'AAA' long-term ratings that we view as relevant
peers--Canada, France, Germany, and the U.K.--we also observe, based on our base
case scenarios for each, that the trajectory of the U.S.'s net public debt is
diverging from the others. Including the U.S., we estimate that these five
sovereigns will have net general government debt to GDP ratios this year
ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%.
By 2015, we project that their net public debt to GDP ratios will range between
30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at
79%. However, in contrast with the U.S., we project that the net public debt
burdens of these other sovereigns will begin to decline, either before or by
2015.
Standard & Poor's
transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment
reflects our view of the likelihood of the sovereign restricting other public
and private issuers' access to foreign exchange needed to meet debt service.
Although in our view the credit standing of the U.S. government has
deteriorated modestly, we see little indication that official interference of
this kind is entering onto the policy agenda of either Congress or the
Administration. Consequently, we continue to view this risk as being highly
remote.
The outlook on the
long-term rating is negative. As our downside alternate fiscal scenario
illustrates, a higher public debt trajectory than we currently assume could
lead us to lower the long-term rating again. On the other hand, as our upside
scenario highlights, if the recommendations of the Congressional Joint Select
Committee on Deficit Reduction--independently or coupled with other
initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high
earners--lead to fiscal consolidation measures beyond the minimum mandated, and
we believe they are likely to slow the deterioration of the government's debt
dynamics, the long-term rating could stabilize at 'AA+'.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.88 |
|
UK Pound |
1 |
Rs.83.54 |
|
Euro |
1 |
Rs.70.90 |
INFORMATION DETAILS
|
Report Prepared
by : |
MNL |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
---- |
NB |
New Business |
---- |
This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is
calculated from a composite of weighted scores obtained from each of the major
sections of this report. The assessed factors and their relative weights (as
indicated through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend (10%) Operational size
(10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.