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Unique insights into the views of institutional risk experts

Dynamic consensus data and analytics provide forward-looking insights into the credit quality and liquidity of companies and sectors globally. Access the combined risk views of experts from the world’s leading financial institutions

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Credit Benchmark
Research & Whitepapers

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October 26, 2022
Q3 2022 Credit Review: Inflation and Credit Risk: Close to Boiling Point

Inflation dominated Q3 financial news, and the resulting short rate squeeze is biting while credit volatility is rising and the COVID recovery is running out of steam. Risk indicators are high in the UK, and oil and gas price volatility has brought havoc to Europe. In North America, weaker credit trends are appearing in several sectors. Believe it or not, there are some bright spots amidst this turmoil. This whitepaper elaborates on some of these trends and shows where credit could be headed next.

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Insights & Research

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November 21, 2022
UK LDI Crisis: Pension Funds Cannot Rely on Sponsors
Pension funds are traditionally well capitalised and usually considered investment grade. Many of the companies that spo ...
November 15, 2022
November Credit Consensus Indicators (CCIs) – UK, EU and US Industrials
EU Industrial firms continue their run of positive credit movement, with a 14th month of improvement. UK Industrial firm ...
November 14, 2022
November 2022 Financial Counterpart Monitor
The Financial Counterpart Monitor from Credit Benchmark provides a unique analysis of the changing creditworthiness of f ...
November 10, 2022
November 2022 Industry Monitor
Credit Benchmark have released the latest end-month industry update, based on the final and complete set of the contribu ...

Data at a Glance

Credit Volatility: Defaults Set to Rise
Many credit portfolio managers expect default rates to be sharply higher in 2023, but the scale of the increase is still a major unknown A useful metric to anticipate rising defaults is credit volatility, measured by monthly percentage changes in default probability. This figure shows various measures of credit volatility, calculated from more than 800 aggregates derived from bank consensus credit ratings.
US Health Care: Not So Healthy?
As pandemic-related spending continues to fall, the US Health Care sector is beginning to show credit deterioration.
US Consumer Services: Trend of Net Improvement Ends
This month US Consumer Services firms ended their streak of 15 consecutive months of positive credit quality.
Transition Matrices (TMs): US Corporates
Transition matrices (“TMs”), derived from credit data, track the speed of full notch and multi-notch upgrades and downgrades over a set timeframe. The leading diagonal shows the proportion of US Corporates that had no change in credit rating – for example, 75.1% remained in the bbb credit category.
Correlation Matrices (CMs)
The figures show correlations between month-on-month PD changes for a small subset of US Corporate sectors from early 2018 to the start of the pandemic in 2020, and from the start of the pandemic in 2020 to the middle of 2022.
Declining Credit Quality: Is Global Tobacco Being Stubbed Out?
Global Tobacco credit quality has weakened by 3.4% month-on-month. The introduction of stricter tobacco measures globally, as well as COVID, all contribute to this change.
US Industrials: A Change in Trend
This month US Industrial firms ended their streak of 17 consecutive months of positive credit quality.
Tech Sector Meltdown & Credit
This chart plots the NASDAQ over the past two years against credit risk movements for the aggregates that cover some of the major technology companies.
Sovereign Credit Risk and Food Prices
A growing list of countries have already seen Sovereign ratings slide in the past two years due to COVID costs; some now face a real risk of outright default as the war in Ukraine drives food, fertilizer and energy prices higher.
Automobiles & Parts: Impact of Chip Shortage
Semiconductor supplies have not yet recovered from COVID disruption. This has caused problems for many industries, but the impact is becoming acute for manufacturers of automobiles and parts, as well as online car dealers and car rental companies.
US Energy Sector: Credit and Equity
This figure shows the relationship between Credit Consensus Ratings and US energy sector equity price changes in 2022.
US Corporates: High vs Low Debt
With US consumer prices growing at their fastest rate since 1981, the Fed is likely to implement at least a half-point interest rate increase this year. This will put further pressure on high-debt US corporate companies that have yet to recover from the impact of COVID.
EU Sovereigns: Credit Risk Changes Q1 2022
The Ukraine war is beginning to affect Sovereign credit risk – average European sovereign risk has deteriorated by 12% since the beginning of the year.
Earth Day: Ukraine War Pushes Energy Efficiency Rethink
The Ukraine war has boosted the need for renewable energy sources, including wind and solar power. Credit consensus data shows that wind companies are generally of better credit quality than solar companies.
Oil Price Volatility & Sovereign Credit
The chart shows nations where pre-war oil revenues (net of production costs) are more than 4% of GDP, plotted against Credit Benchmark (CB) consensus credit risk. 
Russia – Ukraine Credit Shock Hits European Food Producers
The Russia-Ukraine conflict has impacted EU Food Products companies, with a 4% deterioration in average credit risk. The UK is down about 3%, and the Global aggregate is down just over 1%. North American (NA) Food Products actually improved – up 0.3% over the month.
Gender Diversity: Stronger Credits Have More Female Board Members
80% of the FTSE350 companies with consensus coverage meet a target of 33% women representation on their board. Of these, 81% are investment grade, which is 10 percentage points higher than companies who do not meet the target.
Most Banks Remained Strong throughout the Pandemic but Signs of Deterioration within Emerging Markets
The banking industry retained high credit quality throughout the pandemic with credit risk decreasing in 2021 for most countries.
Travel & Leisure Credit Risk Reached a Turning Point in 2021
Travel & Leisure companies felt the COVID crash more than most, and after a disastrous 2020, continued to increase in credit risk by a further 20% in 2021.
The World Turned Green: Upgrades Outnumbered Downgrades in Most Countries in 2021
There was a clear shift from credit risk downgrades to upgrades between 2020 and 2021 across the whole world with upgrades outnumbering downgrades by 3:2. However, the effect was not uniform for all countries.
Insurance Credit Risk
UK Insurance is riskier compared to EU and US
Home Construction: US Credit Outpaces UK
The post-pandemic “race for space” is driving strong demand for housing globally. The improving credit quality of North American Home Construction firms has outstripped their UK counterparts.
Covid and Supply Chain: the Sector Effect
The pandemic has had a significant negative effect on supply chains, and some sectors were impacted more than others. Big nondurable consumer goods saw limited impact, while manufacturing supply chains fared much worse.
COP26: Is Credit Risk Part of the Problem?
Sovereign credit risk shows a clear difference of about 5 notches between the Low and High impact countries on Swiss Re's Climate Economics Index. Corporates show very little difference.
US vs UK Restaurants & Bars
The hospitality industry has been a high profile COVID casualty, with US Restaurants & Bars initially hit harder compared to the UK - but the US group has since bounce backed stronger than the UK
Sector Overview: the Cost of COVID
Airlines and Hotels are two sectors most impacted by the COVID crisis, while Pharmaceuticals have been stable throughout the volatile period.
Sovereign Credit Risk
The reaction of Sovereigns to the start of the pandemic was milder compared to Financials and Corporates.
Marine Transportation
The steady decline from January 2020 is a noticeably early reaction to the Covid outbreak, pushing credit risk up by 25%
US Electricity
US Electricity: Entities with a CRA rating are typically two notches better than those without a CRA rating
Australian Financials
Australian Financials fared better under Covid and rebounded more strongly compared to Global Financials
US Commercial Real Estate
US commercial real estate : the COVID-19 crisis price drop is strongly correlated with increasing credit risk
The Big Short 2.0
The Big Short 2.0 : dramatic drop in US retail REITs credit quality and no signs of recovery
Nareit Index
Most of the office, retail and industrial REITs in the Nareit index are in IG with several HY exceptions

Testimonials

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We subscribe to the CRAs and do our own screening, but we find it useful to have alerts about relevant companies and an alternative to the traditional ratings via Credit Benchmark. The data is also useful for plugging informational gaps where no CRA data is available.
- Chief Credit Officer, Political Risk and Trade Credit, Large Global Insurer
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Weighted by our exposures, CB data suggested our risk was nearly twice as much as we had computed. Given what has happened the past year and the provenance of the data from leading global financial institutions, this data made a real impression on me.
- Portfolio Manager, Global Specialty (Re)Insurer
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We consume this data on a daily basis as an input on our internal automated dashboard to monitor counterparty credit risk. Credit Benchmark data is the best CRM solution available in the market.
- SVP, Counterparty Credit Risk, Major International Asset Manager
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Credit Benchmark is now part of the DNA of our risk function.
- Managing Director, Leading European Bank
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We were never able to get a quantitative view like this before - it has always been qualitative.
- Head of Research, Scandinavian Asset Manager
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The web app is well designed and intuitive. Your product is great; we feel lucky to have come across you.
- Lead Risk Management Analyst, Major CCP
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The data helps our analyst team deal with entity identification issues, monitor more efficiently, and make faster underwriting decisions.
- VP, Large Global Trade Credit Insurer
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The data helps with the challenges we face covering corporate and bank subsidiaries, and the insights are beyond what you get from a traditional credit rating.
- VP, Major Asset Manager

Quick Intelligence

In the Press

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October 13, 2022
Professional Pensions: 40% of DB Schemes ‘May Have Sponsor Credit Issues’
Nearly 40% of sponsors have significantly lower credit ratings than their pension schemes, which increases the likelihood of those funds...
September 21, 2022
The Trade: Securities Lending Reg Reforms Could Hike European Buy-Side Trading Costs by €40 Billion, Report Finds
Trading costs for the European buy-side could be set to hike up by up to €40 billion due to new...
September 6, 2022
Securities Finance Times: Basel Changes Could Trigger 35% Decline in Sec Lending Income for Europe’s Buy-Side
New EU capital rules scheduled for implementation in 2025 are likely to trigger a sharp rise in trading costs for...
August 3, 2022
Securities Finance Times: Rethinking the Economics of Indemnification
Securities lending indemnification is mispriced, subsidised by the agent providers and not all it’s cracked up to be as a...
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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.


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