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Moody's reports: EMEA Non-Financial Corporates Liquidity a Near-term Challenge

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14 November 2008
Paris, November 14, 2008 -- A return to normal conditions on capital and   bank markets cannot be foreseen at this stage, and liquidity is therefore likely to be a major near-term challenge for non-financial corporate issuers in EMEA, says Moody's Investors Service in a new report entitled, "Liquidity of Non-Financial Corporate Issuers in EMEA: A Near-TermChallenge". Moreover, the extent to which the economic slowdown will weaken the liquidity profiles of non-financial companies by curtailing their cash flow generation has yet to be determined.

At present, most issuers reviewed are expected to have sufficient internal and external sources of liquidity available to cover debt maturities and other cash outflows over the next 12 months.

"However,with banks constrained to renew and extend credit facilities and alsoinsisting on significantly tighter terms, liquidity is expected to weaken for a number of issuers over the next few months," says Jean-Michel Carayon, Regional Credit Officer and co-author of the report.

"Moreover, difficult and intermittent terms of access to funding in capital markets are likely to contribute to the gradual deterioration in the liquidity profile of non-financial corporates as a group."Moody's believes internal sources of liquidity are also likely to weaken as the credit turmoil spills over into the real economy, affecting operating cash flows. As explained by Mr. Carayon, "the current severity of the downturn may cause some companies' cash flow to fall short of previous estimates."

In view of this exceptional environment, Moody's may give greater weight to liquidity in its ratings. "While issuers with very strong liquidity and the capacity to restore their credit metrics may continue to be allowed some flexibility within their rating category for temporary deviations from expected credit metrics, issuers with weak liquidity may be increasingly exposed to negative rating actions," says Ms. Renner, Analyst and Co-author.

The report surveys 370 non-financial, non-utility corporate issuers rated B2 and above by Moody's and based in EMEA. Of those 370, 210 are investment grade and 160 are speculative grade issuers rated B2 and above. The report assesses the adequacy of their liquidity profile and identifies potential vulnerabilities.

Copyright 2008, Moody's Investors Service, Inc. and/or its licensors and affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S").

All rights reserved.

- Ends -

Editor's Note
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or any direct, indirect, special, consequential, or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation PolicyMoody's Investors Service Pty Limited does not hold an Australian financial services licence under the Corporations Act. This credit rating opinion has been prepared without taking into account any of your objectives, financial situation or needs. You should, before acting on the opinion, consider the appropriateness of the opinion having regard to your own objectives, financial situation and needs.

For more information, please contact:
Paris
Jean-Michel Carayon
Senior Vice President
Corporate Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt
Sabine Renner
Analyst
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

© Press Release 2008

from Moody's Investors Service
 
 
 
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