|
Report Date : |
03.02.2014 |
IDENTIFICATION DETAILS
|
Name : |
URBAN OUTFITTERS, INC. |
|
|
|
|
Registered Office : |
5000 South Broad Street, Philadelphia, PA 19112 |
|
|
|
|
Country : |
United States |
|
|
|
|
Financials (as on) : |
31.01.2013 |
|
|
|
|
Date of Incorporation : |
06.08.1976 |
|
|
|
|
Legal Form : |
Public Company |
|
|
|
|
Line of Business : |
Subject is engages in the retail and wholesale of general
consumer products. |
|
|
|
|
No. of Employees : |
8,034 |
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 : |
Slow but correct |
|
|
|
|
Litigation : |
-- |
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 – September 30, 2013
|
Country Name |
Previous Rating (30.06.2013) |
Current Rating (30.09.2013) |
|
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 $49,800. 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. Crude
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 climbed another 50% between 2006 and 2008,
and bank foreclosures more than doubled in the same period. Besides dampening
the housing market, soaring oil prices caused a drop in the value of the dollar
and a deterioration in the US merchandise trade deficit, which peaked at $840
billion in 2008. The sub-prime mortgage crisis, falling home prices, investment
bank failures, tight credit, and the global economic downturn 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. In 2012 the federal government reduced the growth of
spending and the deficit shrank to 7.6% of GDP. Wars in Iraq and Afghanistan
required major shifts in national resources from civilian to military purposes
and contributed to the growth of the budget deficit and public debt. Through
2011, the direct costs of the wars totaled nearly $900 billion, according to US
government figures. US revenues from taxes and other sources are lower, as a
percentage of GDP, than those of most other countries. In March 2010, President
OBAMA signed into law the Patient Protection and Affordable Care Act, a health
insurance reform that was designed to 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. In December 2012, the Federal
Reserve Board announced plans to purchase $85 billion per month of
mortgage-backed and Treasury securities in an effort to hold down long-term
interest rates, and to keep short term rates near zero until unemployment drops
below 6.5% or inflation rises above 2.5%. In late 2013, the Fed announced that
it would begin scaling back long-term bond purchases to $75 billion per month
in January 2014 and reduce them further as conditions warranted; the Fed,
however, would keep short-term rates near zero so long as unemployment and
inflation had not crossed the previously stated thresholds. Long-term problems include
stagnation of wages for lower-income families, inadequate investment in
deteriorating infrastructure, rapidly rising medical and pension costs of an
aging population, energy shortages, and sizable current account and budget
deficits.
|
Source
: CIA |
Company name: URBAN OUTFITTERS, INC.
Address: 5000 South Broad Street, Philadelphia, PA 19112 - USA
Telephone: +1 215-454-5500
Fax: +1 215-454-5163
Website: www.urbanoutfittersinc.com
Corporate ID#: 636814
State: Pennsylvania
Judicial form: Public Company (NASDAQ = URBN)
Date founded: August 6, 1976
Stock: 146,934,867 shares outstanding on June 3, 2013.
Value: USD
0.0001 par value
Name of
manager: Richard A. HAYNE
Business:
Urban Outfitters, Inc. engages in the retail and wholesale of general consumer products in the United States.
It operates in two segments, Retail and Wholesale. The company operates retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, and BHLDN brands.
Its Urban Outfitters stores sell women’s and men’s fashion apparel, footwear, accessories, and gifts, as well as apartment wares, such as rugs and pillows to young adults aged 18 to 28; and Anthropologie stores provide
women’s casual apparel and accessories, shoes, gifts, decorative items, and home furnishings to women aged 28 to 45.
The company’s Free People stores primarily offer Free People branded merchandise mix of casual women’s apparel, intimates, shoes, accessories, and gifts to young contemporary women aged 25 to 30; Terrain stores provide lifestyle home and garden products, antiques, live plants, flowers, wellness products, and accessories, as well as landscape and design service solutions; and BHLDN store offers a range of wedding collections consisting of wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie, and decorations.
As of January 31, 2013, it operated 215 Urban Outfitters stores,
180 Anthropologie stores, 77 Free People stores, 2 Terrain garden centers, and 1 BHLDN store in North America and Europe.
The company also operates a wholesale business under the Free People brand name that distributes young women’s casual wear to other retailers and department stores in the United States. In addition, it markets its brands directly to consumers through its e-commerce Websites, including urbanoutfitters.com, anthropologie.com, freepeople.com, urbanoutfitters.co.uk, urbanoutfitters.de, urbanoutfitters.fr, anthropologie.eu, freepeople.co.uk, shopterrain.com, and bhldn.com, as well as through its Urban Outfitters, Anthropologie, and Free People catalogs. The company was founded in 1970 and is based in Philadelphia, Pennsylvania.
Staff: 8,034 (as of April 1, 2013)
Operations
& branches:
At the
headquarters, we find the corporate headquarters, owned.
As of January 31, 2013, it operated 215 Urban Outfitters stores,
180 Anthropologie stores, 77 Free People stores, 2 Terrain garden centers, and 1 BHLDN store in North America and Europe.
Shareholders:
As of
06-30-2013, 75% of the stock is held by institutional and mutual fund owners,
including:
|
FMR, LLC |
6.27% |
|
Vanguard Group, Inc. (The) |
4.77% |
|
State Street Corporation |
3.22% |
|
Fidelity Contrafund Inc |
3.16% |
|
Bank of New York Mellon Corporation |
2.90% |
Management:
Richard D. HAYNE is the Chairman, President and Director.
Richard A. Hayne co-founded Urban Outfitters Inc. in 1970 and has been its President since incorporation in 1976. Mr. Hayne served as Principal Executive Officer of Urban Outfitters Inc. until May 22, 2007.
Mr. Hayne has been the Chairman of the Board of Directors since incorporation in 1976.
Mr. Tedford G. MARLOW, Ted has been the Chief Executive Officer of Urban Outfitters Group at Urban Outfitters Inc. since February 6, 2012.
Mr. Marlow served as the President of Indigo Books & Music Inc. since April 1, 2011. He served as Executive Director of Business Development at Urban
Outfitters Inc. and served as its President of Urban Brand Worldwide from July 2001 to April 12, 2010. From September 2000 to July 2001, Mr. Marlow served as Executive Vice President of Merchandising, Product Development, Production and Marketing at Chico's FAS Inc.
He served as Senior Vice President at Saks Fifth Avenue from November 1998 to September 2000, where he was responsible for all Saks Fifth Avenue private brand product development. From January 1995 to November 1998, Mr. Marlow served as President and Chief Executive Officer of Henri Bendel, a division of The Limited, Inc. He serves as Director of Indigo Books & Music Inc.
Mr. David MCCREIGHT has been the Chief Executive Officer of Anthropologie, Inc. at Urban Outfitters Inc. since November 15, 2011.
Mr. McCreight served as the President of Under Armour from 2008 to 2010. He served as President of Lands' End, Inc. of Sears Holdings Corporation from October 19, 2005 to July 2008 and served as its Executive Vice President of Merchandising. Mr. McCreight served as an Interim President of Lands' End, Inc., from August 2005 to December 2005 and served as its Senior Vice President of Core Merchandising since December 1, 2003 until 2005.
He joined Lands' End in 2003 as Chief Merchant. He joined Sears in 2003 after working for Disney Stores Worldwide as Senior Vice President and General Merchandising Manager of Disney Stores from 2001 to 2003.
He served as President of Smith and Hawken and began his career with roles within the merchant organizations at Saks, The May Company and The Limited.
Mr. Francis J. CONFORTI, Frank has been Chief Financial Officer of Urban Outfitters Inc. since April 3, 2012.
Mr. Conforti has been the Chief Accounting Officer of Urban Outfitters Inc. since March 5, 2010 and Controller since February 2009.
Mr. Conforti has been with Urban Outfitters for three years. He served as Director of Finance and SEC Reporting at Urban Outfitters since March 2007. Mr. Conforti served as Principal Accounting Officer and Director, Accounting of Allied Security Holdings LLC, the holding company of AlliedBarton Security Services LLC. Mr. Conforti served as the Director of Accounting and Principal Accounting Officer of AlliedBarton Security Services LLC. He worked for AlliedBarton Security Systems LLC for five years, serving as Controller for three years.
He is a Certified Public Accountant.
Subsidiaries
& Partnership:
|
Subsidiary |
|
Jurisdiction of Organization |
|
Anthropologie,
Inc. |
|
Pennsylvania |
|
Urban Outfitters
Wholesale, Inc. |
|
Pennsylvania |
|
Urban Outfitters
UK Limited |
|
United Kingdom |
|
Urban Outfitters West
LLC |
|
California |
|
UO Fenwick, Inc. |
|
Delaware |
|
Urban Outfitters
Ireland Limited |
|
Ireland |
|
Free People of PA
LLC |
|
Pennsylvania |
|
UOGC, Inc. |
|
Florida |
|
U.O. Real Estate
LLC |
|
Pennsylvania |
|
U.O. Real Estate Holding
I LLC |
|
Pennsylvania |
|
U.O. Real Estate
Holding II LLC |
|
Pennsylvania |
|
Leifsdottir.com
LLC |
|
Pennsylvania |
|
Leifsdottir LLC |
|
Pennsylvania |
|
Urban Outfitters i
Sverige AB |
|
Sweden |
|
UO Netherlands BV |
|
Netherlands |
|
UO Netherlands
Holding BV |
|
Netherlands |
|
Urban Outfitters
Belgium BVBA |
|
Belgium |
|
Urban Outfitters
Germany GmbH |
|
Germany |
|
HK Sourcing
Limited |
|
Hong Kong |
|
Terrain
Merchandising LLC |
|
Delaware |
|
Terrain LLC |
|
Delaware |
|
Terrain Farm LLC |
|
Delaware |
|
Terrain East LLC |
|
Pennsylvania |
|
J. Franklin Styer
Nurseries, Inc. |
|
Pennsylvania |
|
URBN UK Limited |
|
United Kingdom |
|
URBN NL Holding CV |
|
Netherlands |
|
UO Bermuda Limited |
|
Bermuda |
|
Anthropologie UK
Limited |
|
United Kingdom |
|
BHLDN LLC |
|
Pennsylvania |
|
BHLDN.com LLC |
|
Pennsylvania |
|
URBN Holding, Inc. |
|
Delaware |
|
UO US LLC |
|
Delaware |
|
URBN Canada
Retail, Inc. |
|
Canada |
|
BHLDN Merchandising
LLC |
|
Pennsylvania |
|
URBN Bermuda
Holding Ltd |
|
Bermuda |
|
URBN Bermuda
Holding Partners LP |
|
Bermuda |
|
URBN HK Trading
Limited |
|
Hong Kong |
|
URBN Japan GK |
|
Japan |
|
URBN Netherlands
Retail BV |
|
Netherlands |
On
attachment:
- 10K 2012
- 2nd
10Q 2013
Sales for 6
months 02/2013 to 07/2013: USD 1,406,700,000=
Net
profit: USD 123,500,000
|
Currency in |
As of: |
Jan 31 |
Jan 31 |
Jan 31 |
Jan 31 |
|
TOTAL REVENUES |
1,937.8 |
2,274.1 |
2,473.8 |
2,794.9 |
|
|
NET INCOME |
219.9 |
273.0 |
185.3 |
237.3 |
|
Banks: JP Morgan Chase Bank
Bank of
America
The Bank of
New York
…
Legal filings & complaints:
There are several cases pending with various Courts.
Secured debts summary (UCC): Several
Trade references:
Date
reported: August 2013
High
credit: USD 80,000+
Now owing: 0
Past due: 0
Last purchase:
July 2013
Line of
business: Office supply
Paying
status: 10 days beyond terms
Date
reported: August 2013
High
credit: USD 10,000,000+
Now owing: 0
Past due: 0
Last
purchase: July 2013
Line of
business: Payroll
Paying
status: As agreed
Date
reported: August 2013
High
credit: USD 18,000
Now owing: 0
Past due: 0
Last
purchase: July 2013
Line of
business: Telecommunications
Paying
status: 10 days beyond terms
Domestic
credit history:
Domestic
credit history appears as follow:
|
Monthly Payment Trends - Recent Activity |
|
National
Credit Bureaus gave a medium credit rating.
According to our credit analysts, during the last 6 months, domestic payments were made with an average of 20+ days beyond terms.
International credit history:
Payments of imports are currently made with an average of 5 to 10 days beyond terms.
Other comments:
The Company
maintains a strong business.
The Company
is in good standing.
This means
that all local and federal taxes were paid on due date.
In spite of
late payments noted, the risk is low.
Our
opinion:
A business connection
may be conducted.
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 lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.
· 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.62.47 |
|
|
1 |
Rs.102.94 |
|
Euro |
1 |
Rs.84.60 |
INFORMATION DETAILS
|
Report
Prepared by : |
DPT |
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.