Sub-Saharan Africa Faces Moderately Positive Conditions For Growth, But The Boom Years Might Be Over
The economies of Sub-Saharan Africa have weathered the post-2007 global crisis relatively well, though developments in the world economy may compel the region to take the next step in economic diversification. In comparison with the various regions of the world, the economic performance of the region was strong, and only Asia (excluding Japan) outperformed it. This positive development in a region that faces major demographic challenges is obviously good news, but the "base effect" should not be overlooked. Most economies are growing from a very low base, and huge differences remain among the various countries in Sub-Saharan Africa in terms of wealth and GDP per capita, while within countries economic inequalities are generally large. Complex developments in commodity markets, especially oil, suggest that the boom of 2008 to 2011 is unlikely to be repeated. But the emergence of North America as a potentially large net oil exporter could have important implications for the largest producers in Sub-Saharan Africa, such as Nigeria.
Into The Sunset? Recent Rulings Could Potentially Create Confusion About U.S. RMBS Deal Representations And Warranties
Two recent New York State Supreme Court decisions regarding claims arising from breaches of representations and warranties (R&Ws) in U.S. residential mortgage-backed securities (RMBS) significantly differed in their analyses of the applicable statute of limitations (SOL). Because of this difference, investors should consider both cases when reviewing such transactions. These decisions demonstrate the potential difficulty of pursuing claims arising from breaches of R&Ws in U.S. RMBS transactions, and therefore the importance of upfront due diligence and consideration of operational factors. Recently, some U.S. RMBS transactions have included sunset provisions, or time limits for investors to enforce claims on certain R&W breaches. But just as sunset provisions are a key consideration to our R&W analysis, so are any other limitations, such as SOLs, that act to limit future remedies.
Macedonia Long-Term Ratings Lowered To 'BB-' On Less Predictable Growth And Fiscal Policy Outcomes; Outlook Stable
The downgrade reflects Macedonia's less predictable growth and fiscal policy outcomes due to regional economic pressures; constrained foreign parents of domestic banks; difficulties in managing government arrears; and recent increases in public capital expenditure on non-productive assets. Consequently, we have revised down our expectation of annual average Macedonian GDP growth over 2013 to 2015 to 2%, or less than half of average growth before the 2008-2009 financial crisis. This growth rate is unlikely to generate the job creation required to markedly reduce Macedonia's reported 31% unemployment rate, and raises questions about the viability of the current policy mix.
The ratings on Vienna are supported by the predictable and supportive institutional framework for Austrian states, characterized by consensus-based decision-making and predictable tax-sharing mechanisms in accordance with the central government. The institutional framework also incorporates Austria's recently prolonged stability pact, under which states have committed to consolidate their financials and achieve balanced accounts by 2016. We assume that this path will be made possible by Austria's, as well as Vienna's, resilient and expanding economy, which are the bases for continued growth in shared taxes. The city government has postponed most of its consolidation to the end of its legislature, but has started cost-control measures for dynamic expenditure items like personnel.
The Travelers Cos. Inc. 'A/A-1' And Subsidiaries 'AA/A-1' Ratings Affirmed After Criteria Change; The Outlook Is Stable
The financial strength ratings (FSRs) on the core subsidiaries reflect The Travelers' very strong business profile (BRP) and very strong financial risk profile (FRP) built on an extremely strong competitive profile and extremely strong capital and earnings. Travelers faces intermediate industry and country risk driven by a view of low country risk and intermediate industry risks for its non-life insurance operations. Travelers' low country risk stems from the characteristics of its predominant market, the U.S., as well as its modest presence in a number of other countries that feature high income prospects, relatively effective and stable political institutions, sophisticated financial systems, and strong payment cultures.
The downgrade follows our downward revision of the group's business risk profile and reflects that Telecom Italia's debt leverage, although likely to subside somewhat, will remain too high to sustain the 'BBB' rating level, given the lower business risk profile assessment. We revised our business risk assessment on Telecom Italia to satisfactory from strong because the group should continue to face very challenging conditions in its domestic telecom market in 2013-2014, with uncertain prospects for a return to positive growth thereafter. Moreover, stronger performances of its 67%-owned Brazilian subsidiary should provide only a partial credit cushion. The Italian market, as most markets across Europe currently, is plagued by high fragmentation, harsh price pressures, and commoditization issues in wireless.
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