|
Report No. : |
339500 |
|
Report Date : |
10.09.2015 |
IDENTIFICATION DETAILS
|
Name : |
CECO ENVIRONMENTAL |
|
|
|
|
Registered Office : |
4625 Red Bank Road, Ste 200, Cincinnati, OH 45227 |
|
|
|
|
Country : |
United
States |
|
|
|
|
Financials (as on) : |
30.06.2015 |
|
|
|
|
Date of Incorporation : |
10.01.2002 |
|
|
|
|
Legal Form : |
Public Company (Nasdaq = CECE) |
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Line of Business : |
Subject is an environmental technology company, provides critical solutions in the product recovery, air pollution control, fluid handling, and filtration segments worldwide. |
|
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No. of Employees : |
850 |
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 : |
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 – March 31, 2015
|
Country Name |
Previous Rating (31.12.2014) |
Current Rating (31.03.2015) |
|
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 most technologically powerful economy in the world, with a per capita GDP
of $54,800. US firms are at or near the forefront in technological advances,
especially in computers, pharmaceuticals, and medical, aerospace, and military
equipment; however, their advantage has narrowed since the end of World War II.
Based on a comparison of GDP measured at Purchasing Power Parity conversion
rates, the US economy in 2014, having stood as the largest in the world for
more than a century, slipped into second place behind China, which has more
than tripled the US growth rate for each year of the past four decades.
In the
US, 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.
Long-term
problems for the US 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.
The
onrush of technology has been a driving factor in 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. But the globalization of trade, and especially the rise of
low-wage producers such as China, has put additional downward pressure on wages
and upward pressure on the return to capital. 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 and oil has a major impact on the
overall health of the economy. 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, the US Congress established a $700 billion
Troubled Asset Relief Program (TARP) in October 2008. 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 2014, the direct costs of the wars totaled more than $1.5
trillion, 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 dropped below 6.5% or inflation rose 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 ended the purchases during the summer of 2014. In
2014, the unemployment rate dropped to 6.2%, and continued to fall to 5.5% by
mid-2015, the lowest rate of joblessness since before the global recession
began; inflation stood at 1.7%, and public debt as a share of GDP continued to
decline, following several years of increase.
|
Source
: CIA |
Company name: CECO ENVIRONMENTAL
Address: 4625
Red Bank Road, Ste 200, Cincinnati, OH 45227 - USA
Telephone: +1
513-458-2600
Fax: +1
513-458-2647
Website: www.cecoenviro.com
Corporate ID#: 3478982
State:
Delaware
Judicial form: Public
Company (Nasdaq = CECE)
Date incorporated: January 10, 2002
Date founded:
1966
Stock: 26,442,164
shares issued and outstanding (as of 06-30-2015)
Value: USD
0.01= par value
Name of manager: Jeffrey
LANG
Business:
CECO Environmental Corp., an environmental
technology company, provides critical solutions in the product recovery, air pollution
control, fluid handling, and filtration segments worldwide.
It operates through three segments: Air
Pollution Control, Energy, and Fluid Handling and Filtration.
The Air Pollution Control segment designs and
manufactures various products and solutions, including chemical and biological
scrubbers, fabric filters and cartridge collectors, thermal and catalytic
oxidation systems, cyclones, separators, gas absorbers, and industrial
ventilation systems.
It also offers component parts for industrial
air systems; and alternatives to traditional duct components, as well as
provides custom metal engineered fabrication services.
The Energy segment designs and manufactures
technologies for flue gas and diverter dampers, non-metallic expansion joints,
and natural gas turbine exhaust systems, as well as for silencer and
precipitator applications, primarily for coal-fired and natural gas power
plants, refining, oil production and petrochemical processing, and other
industries.
The Fluid Handling and Filtration segment
designs and manufactures centrifugal pumps for corrosive, abrasive, and high
temperature liquids; and filter products for air and liquid filtration, as well
as product recovery equipment, and air movement and exhaust systems for use in
aquarium/aquaculture, plating and metal finishing, food and beverage,
chemical/petrochemical, wastewater treatment, desalination, and pharmaceutical
markets.
The company offers its products under
Effox-Flextor, Kirk & Blum, KB Duct, Fisher-Klosterman, FKI, Emtrol-Buell,
AVC, Busch International, CECO Filters, Adwest, Aarding, HEE-Duall, Flex-Kleen,
Bio-Reaction, Dean Pump, Fybroc, Sethco, Mefiag Filtration, Keystone Filter,
and Strobic Air brand names to various end-markets and customers for use in
various applications.
CECO Environmental Corp. was founded in 1966
and is based in Cincinnati, Ohio.
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: 13-2566064
Staff: 850
Operations & branches:
At the headquarters,
we find the corporate office.
The Company maintains
several branches in the U.S. including
EFFOX-FLEXTOR
9759 Inter Ocean
Drive, Cincinnati, OH 45246
Shareholders:
The Company is listed with the Nasdaq under
symbol CECE.
As of 06-30-2015, 49% of the stock was held
by institutional and mutual fund owners, including:
|
NSB Advisors LLC |
15.28% |
|
Rutabaga Capital Management, LLC |
8.77% |
|
Ameriprise Financial, Inc. |
7.01% |
|
Trigran Investments Inc |
6.25% |
|
Goldman Sachs Group, Inc. |
5.26% |
Management:
Jeffrey LANG has been the Chief Executive
Officer of CECO Environmental Corp. since February 15, 2010 and has been its
President since September 3, 2013. Mr. Lang provides the Board with valuable
insight on the day-to-day operations of CECO Environmental. He serves as an
officer of several subsidiaries of CECO. He served as the Chief Operating
Officer of CECO Environmental Corp. from May 20, 2010 to September 3, 2013. He
served as an Executive ... Vice President, Branch Sales and Operations at MRC
Global Inc. (also known as McJunkin Red Man Holding Corporation) since August
2008 and its subsidiary, McJunkin Red Man Corporation from November 2007 to
2009. He has more than 30 years of executive operating management. Mr. Lang has
over 30 years of executive operating management experience, including
international experience. He also has industrial and energy sector expertise.
He served as Senior Vice President of Operations/Operating Officer at Red Man
Pipe and Supply Company from 2006 to 2007. At Red Man Pipe and Supply, he had
full P&L responsibility, including sales, operations, distribution,
manufacturing, and strategic planning. He served as the Senior Vice President
of Branch Sales and Operations at Red Man from March 2006 to October 2007. He
was employed by Ingersoll Rand Company for twenty-five years from 1980 to 2005.
At Ingersoll Rand, he started out as a sales engineer in 1980, became a Sales
and Service Branch Manager in 1985, the Southeast U. S. Area Manager of
Ingersoll Rand's Air Solutions in 1995, and by 1999 was the Director and
General Manager, North American Distributor Division, and from 2002 to 2005
served as the Director and General Manager, North American industrial Air
Solutions. Mr. Lang was a key member of Ingersoll Rand's Global Industrial
Technologies sector business. Prior to joining Red Man in March 2006, he served
as Director of Ingersoll Rand's North American Sales and Service business from
January 2002 to March 2006. He worked at Ingersoll Rand's headquarters in various
leadership and management capacities. He also led Ingersoll Rand's North
American Independent Distributor business from May 1999 to December 2002. From
1999 to 2005, he contributed to Ingersoll Rand Air Solutions Group significant
profitable growth and sustainable market leadership. He has been a Director of
CECO Environmental Corp. since May 20, 2010. He serves as a Director of several
subsidiaries of CECO.
Mr. Lang holds an undergraduate degree from
Ohio University and an MBA from Averett College.
Edward J. PRAZJNER is the CFO.
Subsidiaries
And partnership: Numerous in the U.S. and worldwide.
CECO Environmental Corp. reported
consolidated unaudited earnings results for the second quarter and six months
ended June 30, 2015.
For the quarter, the company reported net
sales of $86,961,000 against $66,641,000 a year ago. Income from operations was
$4,488,000 against $7,188,000 a year ago. Income before income taxes was
$3,876,000 against $6,321,000 a year ago. Net income was $2,104,000 or $0.08
per diluted share against $4,493,000 or $0.17 per diluted share a year ago.
Operating income on a non-GAAP basis was $12.3 million compared to $9.9 million
in the prior-year period. Non-GAAP net income was $8.5 million against $6.5
million a year ago. Non-GAAP Adjusted EBITDA was $13.5 million against $11.0
million a year ago. Non-GAAP net income per basic and diluted share was $0.32
compared with $0.25 for the prior-year period.
For the six months, the company reported net
sales of $167,946,000 against $123,811,000 a year ago. Income from operations
was $7,467,000 against $12,680,000 a year ago. Income before income taxes was
$4,159,000 against $10,965,000 a year ago.
Net income was $2,302,000 or $0.09 per basic and diluted share against $7,514,000
or $0.29 per basic and diluted
share a year ago. Operating income on a
non-GAAP basis was $19.8 million compared to $18.1 million in the prior-year
period.
Non-GAAP net income was $14.2 million against
$11.4 million a year ago.
Non-GAAP Adjusted EBITDA was $22.1 million
against $20.4 million a year ago. Non-GAAP net income per diluted share was
$0.53 compared with $0.44 for the prior-year period.
On attachment:
- 10K 2014
- 2nd 10Q 2015
Banks: Bank of America
…
Legal filings & complaints:
State: Indiana
Case number: 1:15-cv-01142-SEB-DKL
Plaintiff: Eyob SEILU
Defendant: Ceco Environmental Corp. et al
Sarah Evans Barker, presiding
Denise K. LaRue, referral
Date filed: 07/21/2015
Date of last update: 08/18/2015
Secured debts summary (UCC): Several
Haut du formulaire
Trade references:
Date reported: August 2015
High credit: USD 35,000
Now owing: 0
Past due: 0
Last purchase: July 2015
Line of business: Office supply
Paying status: 12 days beyond terms
Date reported: August 2015
High credit: USD 1,000,000
Now owing: 0
Past due: 0
Last purchase: July 2015
Line of business: Payroll
Paying status: As agreed
Date reported: August 2015
High credit: USD 3,000
Now owing: 0
Past due: 0
Last purchase: July 2015
Line of business: Telecommunications
Paying status: 11 days beyond terms
Domestic credit history:
Domestic credit
history appears as follow:
|
Monthly Payment
Trends - Recent Activity |
|
Date |
Up to 30 DBT |
31-60 DBT |
61-90 DBT |
>90 DBT |
||
|
03/15 |
$20,400 |
33% |
65% |
2% |
0% |
0% |
|
04/15 |
$20,100 |
29% |
69% |
2% |
0% |
0% |
|
05/15 |
$17,900 |
30% |
70% |
0% |
0% |
0% |
|
06/15 |
$18,500 |
29% |
71% |
0% |
0% |
0% |
|
07/15 |
$5,400 |
96% |
4% |
0% |
0% |
0% |
|
08/15 |
$19,200 |
27% |
73% |
0% |
0% |
0% |
National Credit
Bureaus gave a medium credit risk.
According to our credit analysts, during the last
6 months, domestic payments were made with an average of 10 to 15 days beyond
terms.
International
credit history:
Payments of imports are currently made on
terms.
Other comments:
The Company is
developing its business.
The bank confirmed some
late payments but remains confident.
The Company is in
good standing.
This means that all
local and federal taxes were paid on due date.
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 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.66.29 |
|
UK Pound |
1 |
Rs.101.89 |
|
Euro |
1 |
Rs.73.98 |
INFORMATION DETAILS
|
Analysis Done by
: |
TRI |
|
|
|
|
Report Prepared
by : |
TRU |
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.