LONDON, Jun. 09 2020 — LONDON. S&P Global Ratings. 9 June 2020. S&P Global Ratings has today launched its Green Financing Framework Alignment Opinions under its already-established Green Evaluation service. This means that, for the first time, the credit ratings agency can provide second party opinions on not just the “greenness” of labelled and non-labelled green financial instruments, but also the alignment of entities’ frameworks for issuing such transactions to global market guidelines. The original Green Evaluation can complement these opinions by providing investors with an independent, transparent and deep dive impact assessment of the “greenness” of a transaction.

The Framework Alignment Opinion reflects the degree to which an entity’s green financing framework, which governs its existing or proposed green issuance, adheres to the four components of either the Green Bond Principles (GBP) or the Green Loan Principles (GLP): Use of Proceeds; Process for...

Activity in emerging market (EM) economies is picking up, as lockdowns are eased gradually, but the recovery is still very slow. High-frequency data confirm a precipitous slowdown in activity in April across EM globally. While April was likely the weakest month in terms of activity, getting back to pre-pandemic levels will take time. A lockdown fatigue is developing across EMs driven by mounting political pressures and economic costs. Some EMs are gradually lifting the lockdowns after taming the pandemic. In some cases, however, lockdowns are eased despite increasing COVID-19 cases, which could undermine a potential recovery. We now expect the Indian economy to contract sharply in 2020. The COVID-19 outbreak in India and two months of a strict lockdown--longer in some areas--have led to a sudden stop in the economy.

Activity in emerging market (EM) economies is picking up, as lockdowns are eased gradually, but the recovery is still very slow. High-frequency data confirm a precipitous slowdown in activity in April across EM globally. While April was likely the weakest month in terms of activity, getting back to pre-pandemic levels will take time. A lockdown fatigue is developing across EMs driven by mounting political pressures and economic costs. Some EMs are gradually lifting the lockdowns after taming the pandemic. In some cases, however, lockdowns are eased despite increasing COVID-19 cases, which could undermine a potential recovery. We now expect the Indian economy to contract sharply in 2020. The COVID-19 outbreak in India and two months of a strict lockdown--longer in some areas--have led to a sudden stop in the economy.

We entered the current recession with a median credit rating for corporate and sovereign entities significantly weaker than at the onset of the global financial crisis ('BBB' versus 'BB+'). Speculative-grade bond issuance more than doubled in the past decade, fueled by low interest rates. The median rating for new nonfinancial corporate issuers is 'B' globally, declining from 'BB-' in 2008. We expect the U.S. trailing 12-month speculative-grade corporate default rate to rise to 12.5% by March from 3.5% in March this year. Airports across the world face a long, slow recovery from the fall in traffic and revenues due to the lockdowns and travel restrictions related to COVID-19. We now estimate global air passenger numbers to drop 50%-55% this year, a far steeper decline than we anticipated in March. We expect passenger numbers will stay below pre-pandemic levels through 2023.

Technological disruption leads to new customer expectations, new forms of competition, but also offers new opportunities for banks. All these trends may ultimately impact the credit profile of banking industries across the globe.

The report includes a round-up of the latest credit developments that we've observed across structured finance sectors, along with data on recent rating actions and underlying performance indicators. We also highlight the key takeaways from our recent research publications.