|
Report No. : |
305862 |
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Report Date : |
04.02.2015 |
IDENTIFICATION DETAILS
|
Name : |
J. CREW GROUP, INC. |
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Registered Office : |
770 Broadway, |
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Country : |
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Date of Incorporation : |
11.10.2005 |
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Legal Form : |
Corporation – Profit |
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Line of Business : |
Subject operates as a multi-brand retailer of women’s, men’s, and
children’s apparel, shoes, and accessories |
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No. of Employees : |
5,200 |
RATING & COMMENTS
|
MIRA’s Rating : |
B |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
Status : |
Moderate |
|
Payment Behaviour : |
Slow but correct |
|
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 – December 31, 2014
|
Country Name |
Previous Rating (30.09.2014) |
Current Rating (31.12.2014) |
|
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 (Fed) 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 |
Your order on: J
CREW FACTORY
One
Clifford Way, Asheville, NC
This is a store owned by:
Company name: J. CREW GROUP, INC.
Headquarters: 770
Broadway, New York, NY 10003 – USA
Telephone: +1
212-209-2500
Fax: +1 212-209-2666
Website: www.jcrew.com
Corporate ID#: 4043069
State: Delaware
Judicial form: Corporation - Profit
Date founded: October 11, 2005
Stock: 1,000 shares common
Value: USD =
par value
Name of manager: MILLARD S. DREXLER
Business:
J.Crew Group, Inc. operates as a multi-brand retailer of women’s, men’s,
and children’s apparel, shoes, and accessories primarily in the United States,
the United Kingdom, and Canada.
It designs, markets, and sells an assortment of women’s and men’s
apparel and accessories, including outerwear, suiting, casual attire, wedding
and bridesmaids dresses, swimwear, shoes, handbags, belts, socks, and jewelry,
as well as casual t-shirts, hand-embellished sweaters and coats, Italian
cashmere, limited edition prints and patterns, and vintage inspired details
under the J.Crew brand name. The company also provides a product assortment of
apparel and accessories for the children’s market from infant to children’s
size 14 under the crewcuts brand, as well as products for women, including
jeans; tees, cardigans, and blazers; boots; and jewelry under the Madewell
brand.
It markets its products through retail and factory stores, catalogs, and
the Internet.
As of March 24, 2014, the Company operated 266 J.Crew retail stores, 66
Madewell stores, jcrew.com, jcrewfactory.com, the J.Crew catalog, madewell.com,
the Madewell catalog, and 122 factory stores.
The company was founded in 1983 and is headquartered in New York, New
York.
J CREW GROUP, INC. was formerly listed with the NYSE under symbol
As of January 31, 2014, J. Crew Group, Inc. was taken private.
Office
of the Foreign Assets Control (OFAC):
The company is not listed on the OFAC list.
The Specially Designated Nationals (SDN) List is a publication of OFAC
which lists individuals and organizations with whom United States citizens and
permanent residents are prohibited from doing business.
EIN: 22-2894486
Staff: 5,200
Operations & branches:
At the headquarters, we
find the corporate office.
As of March 24, 2014, the Company operated 266 J.Crew retail stores, 66 Madewell
stores, 122 factory stores, jcrew.com, jcrewfactory.com, the J.Crew catalog,
madewell.com, and the Madewell catalog.
Shareholders:
On March 7, 2011, J. Crew Group, Inc. was acquired by affiliates of
TPG Capital, L.P. and Leonard
Green & Partners, L.P. in
a transaction, referred to as the
“Acquisition,” valued at approximately USD 3.1
billion, including the incurrence of $1.6 billion of debt and
approximately
USD 152 million of transaction costs.
Management:
Millard S. DREXLER has been the Chairman of the Board and Chief
Executive Officer of Madewell, Inc. since 2003.
Mr. Drexler has been the Chairman and Chief Executive Officer of J. Crew
Group Inc. since January 2003. Mr. Drexler has been Chief Executive Officer of
J Crew Intermediate LLC., a subsidiary of J. Crew Group Inc. since January
2003. He serves as Chief Executive Officer of J Crew Operating Corp., a
subsidiary of J Crew Intermediate LLC.
Mr. Drexler served as President of Old Navy, Inc.
He began his career at Bloomingdale's in 1968. He served as Chief
Executive Officer of Gap Inc. from 1995 to September 2002 and as its President
from 1987 to September 2002. He spent nineteen years at Gap Inc.
He served as President and Chief Executive Officer of Ann Taylor. He
began his career at Bloomingdale's in 1968. Mr. Drexler serves as the Chairman
of J Crew Operating Corp. He has been the Chairman of J Crew Intermediate LLC
since March 2003. He has been a Director of J. Crew Group Inc. since March 2003
and J Crew Intermediate LLC since March 2003. He has been a Director of Apple
Inc. (Formerly Apple Computer Inc.) since 1999. He serves as a Director of J
Crew Operating Corp. He serves as a Director of Teach For America, Inc. He
serves as a Member of Board of Advisors at Common Sense Media, Inc. He served
as a Director of Common Sense Media, Inc. He served as a Director of Gap Inc.
from November 1983 to October 2002.
Ms. Jenna LYONS has been the President of Madewell Inc. since July 2010
and Executive Creative Director since April 2010. Ms. Lyons has been the
President and Executive Creative Director of J. Crew Group, Inc. since July
2010. She served as Creative Director of J. Crew Group, Inc. since 2007. She
served as a Senior Vice President of Women’s Design at J. Crew Group, Inc.
since 2005. She joined J.Crew in 1990 as an Assistant Designer and has held a
variety of positions, including Designer from 1994 to 1995, Design Director
from 1996 to 1998, Senior Design Director in 1999 and Vice President of Women’s
Design from 1999 to 2005. She has been a Director of Shake Shack Inc. since
December 2014.
James S. SCULLY has been the Chief Operating Officer of J. Crew Group,
Inc. since April 2013. Mr. Scully served as an Interim Chief Financial Officer
of J. Crew Group, Inc. from January 16, 2015 to January 28, 2015 and also
served as its Executive Vice President until January 28, 2015. Mr. Scully
served as the Chief Administration Officer of J. Crew Group, Inc. since
September 2008. He served as Chief Financial Officer and Executive Vice
President of J Crew Operating Corp from September 7, 2005 to May 15, 2012 and
served as its Principal Accounting Officer. Mr. Scully serves as an Executive
Vice President of Bon-Ton Distribution Inc. Mr. Scully served as Executive Vice
President of J Crew Group Inc. since September 7, 2005. Prior to joining J Crew
Operating Corp., Mr. Scully served as Executive Vice President of Human
Resources and Strategic Planning of Saks Incorporated since 2004. Before that
Mr. Scully served as Saks Incorporated's Senior Vice President of Strategic and
Financial Planning from 1999 to 2004 and Senior Vice President & Treasurer
from 1997 to 1999. Prior to joining Saks Incorporated, Mr. Scully served as
Senior Vice President of Corporate Finance at Bank of America formerly
NationsBank) from 1994 to 1997.
Subsidiaries &
Partnership:
|
J.Crew Operating Corp. |
|
Delaware |
|
|
J.Crew Inc. |
|
Delaware |
|
|
Grace Holmes, Inc. |
|
Delaware |
|
|
H.F.D. No. 55, Inc. |
|
Delaware |
|
|
Madewell, Inc. |
|
Delaware |
|
|
J.Crew Virginia, Inc. |
|
Virginia |
|
|
J.Crew International, Inc. |
|
Delaware |
|
|
J.Crew Canada Inc. |
|
Ontario, Canada |
|
|
J.Crew U.K. Limited |
|
United Kingdom |
|
|
J.Crew Japan, Ltd. |
|
Japan |
|
|
J.Crew Global Holdings A, LLC |
|
Delaware |
|
|
J.Crew Global Holdings Bermuda LP |
|
Bermuda |
|
|
J.Crew Global Holdings B, LLC |
|
Delaware |
|
|
J.Crew Netherlands C.V. |
|
Netherlands |
|
|
J.Crew Hong Kong Services, Limited |
|
Hong Kong |
|
|
J.Crew Hong Kong Limited |
|
Hong Kong |
|
|
J.Crew Asia Limited |
|
Hong Kong |
|
|
J.Crew Hong Kong Intermediate, Ltd. |
|
Hong Kong |
|
|
J.Crew Apparel Trading (Shenzhen) Company Limited |
|
Shenzhen, PRC |
|
On attachment:
- 10K 2013-214 (ending
January 2014)
- 3rd 10Q 2014
(ending October 2014)
On December 4, 2014, J. Crew Group, Inc. reported unaudited consolidated
earnings results for the third quarter and nine months ending November 1, 2014.
For the quarter, the company’s revenues increased 6% to $655.2 million,
with comparable company sales decreasing 2%. Comparable company sales increased
4% in the third quarter last year. Operating loss was $636.3 million compared
with operating income of $82.9 million in the third quarter last year. Net loss
was $607.8 million compared with net income of $35.4 million in the third
quarter last year. Adjusted EBITDA was $80.9 million compared to $110.4 million
in the third quarter last year.
Loss before income taxes was $654,067,000 compared to income before
income taxes of $56,445,000 a year ago. LBITDA was $610.0 million compared to
EBITDA of $104.1 million a year ago. Cash flows from operating activities were
$51.7 million compared to $21.5 million a year ago.
For the nine months, the company’s revenues increased 8% to $1,874.3
million, with comparable company sales remaining flat. Comparable company sales
increased 3% in the first nine months last year. Store sales increased 6% to
$1,267.7 million on top of an increase of 6% in the first nine months last
year. Operating loss was $566.3 million compared with operating income of
$212.3 million in the first nine months last year. Net loss was $627.2 million
compared with net income of $82.2 million in the first nine months last year.
Adjusted EBITDA was $213.1 million compared to $294.4 million in the first nine
months last year. Loss before income taxes was $682,239,000 compared to income
before income taxes of $133,910,000 a year ago. LBITDA was $491.3 million
compared to EBITDA of $276.1 million a year ago. Cash flows from operating
activities were $82.2 million compared to $121.8 million a year ago. The
company reported impairment losses for the third quarter ended of November 1,
2014. For the period, the company reported impairment losses of $683,985,000.
Banks: Bank of America
JP Morgan Chase Bank
…
Legal filings & complaints:
As of today date, there is no legal filing pending with the District
Courts.
Secured debts summary (UCC):
None
|
|
|
TRADE REFERENCES:
Date reported: December 2014
High credit: USD 30,000
Now owing: 0
Past due: 0
Last purchase: November 2014
Line of business: Office supply
Paying status: 10 days beyond terms
Date reported: December 2014
High credit: USD 6,000,000
Now owing: 0
Past due: 0
Last purchase: November 2014
Line of business: Payroll
Paying status: As agreed
Date reported: December 2014
High credit: USD 12,000
Now owing: 0
Past due: 0
Last purchase: November 2014
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 10 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 is in good
standing.
This means that all local and
federal taxes were paid on due date.
The risk is medium.
Our opinion:
The Company reports losses.
A business connection may
be conducted but we suggest you to check regularly the way of payments.
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.61.74 |
|
|
1 |
Rs.92.71 |
|
Euro |
1 |
Rs.69.94 |
INFORMATION DETAILS
|
Analysis Done by
: |
RAS |
|
|
|
|
Report Prepared
by : |
TPT |
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.