CHICAGO—Market conditions for U.S. corporate credit will remain favourable, with issuers well-positioned against market and regulatory risks in 2013, according to the latest report by Fitch Ratings, a global rating agency based in New York.
The firm expects modest GDP growth in 2013, healthy operating margins, solid balance sheets and extended maturity profiles should provide corporations with ample flexibility to face ongoing macroeconomic risks abroad and government tax/spending uncertainties in the U.S.
The report says corporations have conservatively managed their capital structures and capital allocation, despite a low and declining cost of capital.
Downside risks are limited and mainly company-specific, such as business-model risks and underperformance rather than leverage.
The short-term resolution of the fiscal cliff will do little to address tax and spending uncertainties and Fitch says legislative and regulatory risks will remain high, acting as a drag on investment.
U.S. capital expenditures will decline modestly in 2013, although Fitch expects an increase in strategic acquisitions, given a slow-growth environment and low-cost capital.