MIRA INFORM REPORT

 

 

Report No. :

341752

Report Date :

21.09.2015

 

IDENTIFICATION DETAILS

 

Name :

VIASAT, INC.

 

 

Registered Office :

6155 El Camino Real, Carlsbad, CA 92009

 

 

Country :

United States

 

 

Financials (as on) :

30.06.2015 (Unaudited - Consolidated)

 

 

Year of Incorporation :

1986

 

 

Legal Form :

Public Company

 

 

Line of Business :

Subject provides satellite and wireless networking applications; and secure networking systems, products, and services worldwide.

 

 

No. of Employees :

3,400

 

 

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 :

Moderate

 

 

Payment Behaviour :

Slow but correct

 

 

Litigation :

Exist

 

 

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 and address

 

Your order on:              VIA SAT INC

 

Tha correct name is:

 

Company name:           VIASAT, INC. 

 

Address:                       6155 El Camino Real, Carlsbad, CA 92009 - USA

 

Telephone:                    +1 760-476-2200

 

Fax:                              +1 760-929-3941

 

Website:                       www.viasat.com

 

 

Company summary

 

Corporate ID#:              2676843

 

State:                           Delaware

 

Judicial form:                Public Company (Nasdaq = VSAT)

 

Date incorporated:        10-25-1996

 

Date founded:              1986

 

Stock:                           48,032,227 shares issued and outstanding (as of 07-31-2015)

 

Value:                           USD 0.0001= par value

 

Name of manager:         Mark D. DANKBERG

 

 

ACTIVITIES & OPERATIONS

 

IST

 

Business:

 

ViaSat, Inc. provides satellite and wireless networking applications; and secure networking systems, products, and services worldwide.

The company’s Satellite Services segment offers retail and wholesale broadband satellite services under the Exede and WildBlue brand names, which offers two-way satellite-based broadband Internet access and voice over Internet protocol to consumers and businesses.

 

It also provides mobile broadband services comprising network management and high-speed Internet connectivity services for customers using airborne, maritime, and ground mobile satellite systems; and enterprise broadband services. As of April 3, 2015, this segment provided broadband satellite services to approximately 686,000 subscribers.

Its Commercial Networks segment offers fixed satellite networks that comprise satellite network infrastructure and ground terminals designed to access

Ka-band broadband services; mobile broadband satellite communication systems; and antenna systems for terrestrial and satellite applications, such as geospatial imagery, mobile satellite communication, Ka-band gateways, and other multi-band antennas. This segment also provides design and technology services, including analysis, design, and specification of satellites and ground systems; ASIC and MMIC design and production; and wide area network compression for enterprise networks.

The Company’s Government Systems segment offers government satellite communication systems, including various broadband modems, terminals, network access control systems, and antenna systems; information security and assurance products, and secure networking solutions; and tactical radio and information distribution systems to enable real-time collection and dissemination of secure real-time digital information between command centers, communications nodes, and air defense systems.

ViaSat, Inc. was founded in 1986 and is headquartered in Carlsbad, California.

 

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:                  33-0174996

 

Staff:                3,400

 

 

Operations & branches:

 

At the headquarters, we find a large factory, warehouse andc office, owned.

 

The Company maintains several branches in the U.S. including the one located:

 

1725 Breckinridge Plaza

Duluth, GA 30096

 

 

SHAREHOLDERS & MANAGERS

 

Shareholders:

 

The Company is listed with the Nasdaq under symbol VSAT.

 

As of 06-30-2015, 84% of the stock was held by institutional and mutual fund owners, including:

 

Baupost Group, Inc,.(The) LLC

24.17%

FPR Partners, LLC

9.87%

Southeastern Asset Management Inc/tn/

7.30%

Longleaf Partners Small-Cap Fund

7.20%

 

Management:

 

Mark D. DANKBERG is Chairman and Chief Executive Officer at ViaSat Inc.

Mr. Dankberg Co-founded ViaSat Inc in May 1986 and has been its Chief Executive Officer since its inception in May 1986.

He served as the President of ViaSat Inc. from May 1986 to December 1, 2003. Prior to ViaSat, he served as an Assistant Vice President of M/A-COM Linkabit, a manufacturer of satellite telecommunications equipment, from 1979 to 1986 and Communications Engineer for Rockwell International Corp. from 1977 to 1979. He has been the Chairman of the Board and Director at ViaSat Inc. since its inception in May 1986. He serves as a Director of TrellisWare Technologies, Inc. and U.S. Monolithics. He serves on the advisory board of Minnetronix, Inc. He served as an Independent Director of REMEC Inc. and REMEC Liquidating Trust from September 1999 to December 31, 2010.

Mr. Dankberg holds B.S.E.E. and M.E.E. Degrees from Rice University.

 

Richard A. BALDRIDGE has been the President of ViaSat Inc. since December 1, 2003 and has been its Chief Operating Officer since September 2000.

Mr. Baldridge joined ViaSat Inc. in April 1999 served as its Vice President and Chief Financial Officer. From September 2000 to August 2002, he served as an Executive Vice President, Chief Operating Officer and Chief Financial Officer of ViaSat Inc. He served as an Executive Vice President of ViaSat Inc. since September 2000 until August 2002. He served as a Vice President and General Manager of Raytheon Corporation’s Training Systems Division from January 1998 to April 1999. From June 1994 to December 1997, Mr. Baldridge served as the Chief Operating Officer, Chief Financial Officer and Vice President of Finance and Administration for Hughes Information Systems and Hughes Training Inc., prior to their acquisition by Raytheon in 1997.

His other experience includes various senior financial management roles with General Dynamics Corporation. He has been a Director of Ducommun Inc. since March 22, 2013. He serves as a Director of CommNexus San Diego. He also serves as a Director of Jobs for America’s Graduates and the National Alliance of Business (NAB).

Mr. Baldridge holds a B.S. degree in Business Administration, with an emphasis in Information Systems, from New Mexico State University.

 

Ms. Shawn L. DUFFY is the CFO

 

 

Subsidiaries

And partnership:

 

IOM Licensing Holding Company Limited

    

Isle of Man

Thames Space Limited

    

United Kingdom

ViaSat (IOM) Limited

    

Isle of Man

ViaSat Antenna Systems S.A.

    

Switzerland

ViaSat Australia PTY Limited

    

Australia

ViaSat China Services, Inc.

    

Delaware

ViaSat Europe S.r.L.

    

Italy

ViaSat India Pvt. Ltd.

    

India

ViaSat Peru S.R.L.

    

Peru

ViaSat Satellite Holdings Limited

    

United Kingdom

ViaSat Satellite Ventures Holdings Luxembourg S.a.r.l.

    

Luxembourg

ViaSat Stimulus, LLC

    

Delaware

ViaSat Technologies Limited

    

United Kingdom

ViaSat UK Limited

    

United Kingdom

ViaSat Worldwide Limited

    

Delaware

ViaSat, Inc. Limitada

    

Chile

 

 

FINANCIALS

 

On August 6, 2015, ViaSat Inc. announced unaudited consolidated financial results for the fiscal first quarter ended June 30, 2015.

 

For the quarter, the company reported revenues of $344.4 million against $319.5 million a year ago. Income from operations was $9,414,000 against loss from operations of $1,169,000 a year ago. Income before income taxes was $3,526,000 against loss before income taxes of $9,772,000 a year ago.

 

Net income was $2,519,000 against net loss of $6,321,000 a year ago. Adjusted EBITDA was $77.5 million against $60.2 million a year ago. Net income was $2.6 million against net loss of $5.9 million a year ago. Diluted net income per share was $0.05 against net loss per diluted share of $0.13 a year ago. Non-GAAP net income attributable to company was $12,116,000 against $2,416,000 a year ago. Non-GAAP diluted net income per share attributable to company common stockholders was $0.25 against $0.05 a year ago. Strong revenue increases in its Satellite Services and Government Systems segment more than offset declines in Commercial Networks, resulting in overall revenue growth of 8%. Net debt increased by about $55 million sequential from fourth quarter of 2015. The company announced that current outlook for adjusted EBITDA for the fiscal year 2016, hasn't changed from last quarter. The company has been targeting about 20% year-over-year growth, excluding the nonrecurring portion of the Loral settlement, and that would put the company in the range of about $360 million. The company is anticipating that growth will come from Satellite Services, which is driven by growth in consumer broadband as well as commercial aero.

 

On attachment:

- 10K 2014/2015 (fiscal year ending March 2015)

- 1st 10Q 2015

 

 

Banks:  Union Bank

                        JPMorgan Chase Bank

                       

 

LEGAL FILINGS

 

Legal filings & complaints:

 

State: California

Case number: 3:15-cv-00143-BEN-NLS

Plaintiff: Advanced Media Networks, LLC

Defendant: ViaSat, Inc. et al
Roger T. Benitez, presiding
Nita L. Stormes, referral
Date filed: 01/21/2015
Date of last filing: 08/20/2015

Cause: Patent infringement

 

State: Texas

Case number: 1:15-cv-00163

Plaintiff: Amando Salazar et al

Defendant: ViaSat, Inc.
Andrew S. Hanen, presiding
Ronald G. Morgan, referral
Date filed: 09/11/2015
Date of last filing: 09/18/2015

 

 

Secured debts summary (UCC):   Several

 

 

COMPANY CREDIT HISTORY

 

Trade references:

 

Date reported:               August 2015

High credit:                   USD 60,000+

Now owing:                   0

Past due:                      0

Last purchase:              July 2015

Line of business:           Office supply

Paying status:               8 days beyond terms

 

Date reported:               August 2015

High credit:                   USD 6,000,000

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 6,000

Now owing:                   0

Past due:                      0

Last purchase:              July 2015

Line of business:           Telecommunications

Paying status:               On terms

 

Domestic credit history:

 

Domestic credit history appears as follow:

 

Monthly Payment Trends - Recent Activity

 

 

 

Date

Balance

Current

Up to 30 DBT

31-60 DBT

61-90 DBT

>90 DBT

04/15

$623,400

71%

14%

2%

10%

3%

05/15

$491,200

72%

13%

3%

1%

11%

06/15

$590,000

72%

11%

5%

3%

9%

07/15

$556,900

71%

22%

3%

1%

3%

08/15

$639,600

76%

16%

4%

1%

3%

09/15

$704,200

66%

29%

1%

1%

3%

 

National Credit Bureaus gave a correct credit risk.

 

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 on terms.

 

 

Other comments:

 

The Company maintains a regular business.

 

The Company is in good standing.

This means that all local and federal taxes were paid on due date.

 

The risk remains 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.66.93

UK Pound

1

Rs.102.75

Euro

1

Rs.75.13

 

INFORMATION DETAILS

 

Analysis Done by :

KAS

 

 

Report Prepared by :

VNT

 

               

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

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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%)

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.