Credit Market Research

Global

The Credit Outlook

Negative Outlooks Rise as Eurozone Troubles Weigh on Global Growth Special Report
Global Slowdown: New shocks centred on the eurozone are slowing the global recovery. The return of financial tensions in Q212, private-sector deleveraging, sizeable fiscal austerity measures in several member states and declining confidence are weighing heavily on shortterm growth. Risks are skewed to the downside.
The Credit Outlook provides an overview of Fitch Ratings outlook across all rated sectors and regions, identifying the main macro factors that will drive credit trends over the next 12-24 months. It is published semiannually.

Emerging Markets Not Untouched: Many large emerging markets face slowing growth and macroeconomic policy or rebalancing challenges. This is even as emerging market economies generally are showing impressive resilience to tough global conditions and are outperforming developed countries. US Recovery Uncertain: The weak US recovery reflects the gradual rebalancing of the economy, such as the unwinding of excessive household debt and the housing market correction, rather than a permanent downshift in the growth rate of the economy. Risks include uncertainty regarding fiscal policy and the diminished capacity for significant fiscal and monetary policy stimulus. Outlooks Turn More Negative: The proportion of ratings with negative outlooks roughly doubled in the last six months in the sovereign, international public finance, financial institution and insurance sectors. The root cause is the eurozone sovereign crisis, which continues to percolate through to other sectors and, to an increasing extent, other regions. By contrast, greater stability was shown in US public finance, corporates and infrastructure. Downturn Exceeds Expectations: The combination of continued downgrades and rising negative outlooks illustrates that the depth and magnitude of the downturn has exceeded initial expectations. There does not appear to be a credible plan that has convinced markets that sovereigns, and in some cases their banking systems, have the resources or ability to put their fiscal, financial and asset quality on a sustainable path to long-term repair. Eurozone Sovereigns Pressured: The eurozone crisis, which threatens both the global economic and credit outlook, had a strong impact on sovereign rating outlooks. Fitch believes the crisis is likely to be prolonged. Downward pressure on eurozone sovereign ratings will persist until European leaders articulate a credible and substantive road-map towards greater fiscal, financial and political integration. Rating Mix Weakens Further: The universe of highest grade ratings (AAA and AA) continues to shrink, with all eight global sectors experiencing reductions since the end of 2010. The sharpest decline occurred in international public finance, where eurozone sovereign downgrades had a negative knock-on effect and the high-grade rating segment halved to 26%. For other sectors, the reduction was in the single-digit percentage point range.
Figure 1

Related Research
Appendix Eurozone webpage

Analysts
Monica Insoll +44 20 3530 1060 monica.insoll@fitchratings.com Mariarosa Verde +1 212 908 0791 mariarosa.verde@fitchratings.com Trevor Pitman (Regional Credit Officer EMEA and APAC) +44 20 3530 1059 trevor.pitman@fitchratings.com Eileen Fahey (Regional Credit Officer US) +1 312 368 5468 eileen.fahey@fitchratings.com
a

Rating Outlooks
Negative outlooks (% of portfolio) 60
Corporates US Publ Fin SF Intl Publ Fin Sovereign Finl Inst Infrastructure

45 30
15 0 Q307

Q108

Q308

Q109

Q309

Q110

Q310

Q111

Q311

Q112

(Quarter/year)
Source: Fitch

See appendix for full author list.

www.fitchratings.com

23 July 2012

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Sovereign Outlook Trend
Eurozone crisis threatens global economic and credit outlook. Eurozone sovereign ratings are under strong downward pressure. Upward momentum of EM ratings stalls in 2012. Negative outlooks now exceed positive outlooks.

The systemic crisis engulfing the eurozone continues to threaten the global economic and credit outlook. The near-term risk of a Greek exit from the euro and subsequent potential severe contagion to other countries has fallen following Greek parliamentary elections in June. However, the crisis is likely to be prolonged and downward pressure on eurozone sovereign ratings is unlikely to diminish until European leaders articulate a credible and substantive roadmap towards greater fiscal, financial and political integration. New shocks centred on the eurozone are slowing the global recovery, which is creating a more difficult backdrop for sovereign credit. Fitch and consensus projections for global growth have been revised down successively over the past 12 months. Fitch forecasts global GDP growth to slow to just 2.2% in 2012 from 2.7% in 2011, before gradually firming to 2.8% in 2013 and 3.1% in 2014. Risks are skewed to the downside, though lower oil prices could offer some respite.
Figure 2 Figure 3

Negative Outlooks
(% of portfolio) 40 30 20 10 0
Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112

Rating Distribution
As at 30 Jun 2012
EM All B 20% CCC & below 1%

DM

AAA 15% AA 7% A 16%

BB 17% BBB 24%

(Quarter/year) Source: Fitch Source: Fitch

Developed Markets
Eurozone debt crisis intensifies again

Key Risks Key Risks

Intensification of eurozone crisis. Comment 1 Global economic recovery stalls. Comment 2 Sharp and sustained fall in commodity prices would create winners and losers.

The severity of the eurozone debt crisis intensified again in Q212 with weakening growth prospects, accelerating private sector capital outflows from so-called peripheral countries, high sovereign bond yields and a rising political backlash against austerity. At their summit on 28-29 June, EU leaders announced some positive policy steps that eased downward pressure on eurozone sovereign ratings somewhat. These included measures to increase the flexibility of providing financial support to member states as well as plans to create a 'single supervisory mechanism' for banks, which could be an important step towards a form of banking union. Implementation risk is high. Meanwhile, governments must deliver fiscal consolidation and structural reforms to underpin confidence in debt sustainability and medium-term growth prospects (See Fitch: Summit Eases Near-Term Pressures on Euro Sovereign Ratings). There has been a dramatic deterioration in Spains credit-worthiness this year owing to the increased cost of bank recapitalisation, deeper recession, upward revisions of fiscal deficits and targets, rising projections of the public debt ratio and tightening funding conditions. Spains size and potential contagion to Italy makes it more systemically important than Greece and more symptomatic of fundamental design flaws in Economic and Monetary Union. The near-term risk of a Greek exit from the euro has fallen following the victory of New Democracy in Greeces second parliamentary elections this year and the formation of a new government that is supportive of the EUR173bn EU-IMF programme. However, the economic contraction is continuing apace and the country's liquidity position is deteriorating, underscoring the urgency of reaching agreement with the EU/IMF on the programme and a resumption of disbursements. Fiscal austerity and painful structural reform combined with a strong opposition led by the Syriza political party means risks remain acute.

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In the event of a Greek exit or it becoming probable in the near term, Fitch would place all eurozone sovereigns on Rating Watch Negative (RWN) and likely downgrade Italy and peripheral country ratings. If EU policymakers were to fail to produce a strong and effective response and there were material contagion to the periphery and rising contingent liabilities facing the core, then Fitch would likely downgrade all eurozone sovereigns.

Multiple eurozone downgrades

The crisis took a further heavy toll on ratings in H112, as Fitch downgraded six eurozone sovereigns by a total of 16 notches (12 excluding Greece). Spain was particularly hard hit by two multi-notch downgrades (totalling five notches), taking its rating to BBB. In March, Greece set a record EUR199bn sovereign default, the first by an advanced country in the modern era. Among other developed countries, Fitch in May downgraded Japan the worlds third-largest economy and second-largest debtor (in dollar terms) to A+/Negative Outlook. Bermuda was also downgraded, to AA. The upgrade of Iceland (BBB) back to investment grade in February was a rare bright spot and source of hope to other crisis-hit countries. The country has exited its IMF programme and regained international capital market access Some 12 advanced countries are on Negative Outlook and none on Positive Outlook, underscoring the direction of pressure on their ratings.

Emerging Markets
Impressive economic resilience
Emerging market (EM) economies are generally continuing to show impressive resilience to tough global conditions and to outperform developed countries. However, several large EMs, including China, India, Brazil and Turkey, are facing slowing growth and macroeconomic policy or rebalancing challenges. Global economic and financial uncertainty and the potential for severe shocks highlight the importance of strong buffers in terms of government balance sheets, external finances, and robust policy frameworks for EM sovereign credit profiles. Major commodity producers with weaker balance sheets and policy frameworks would face more difficult circumstances in the event of a further and sustained drop in international commodity prices.

Upward rating momentum stalls

There has been only one EM sovereign upgrade so far in 2012, after 18 in 2011 and 13 in 2010. There were only two downgrades (Hungary (BB+) and Egypt (B+)), but Negative Outlooks now outnumber Positive ones. In part, the change in EM rating dynamics reflects the natural completion of post-global financial crisis upgrades, as some countries recovered from crisis situations or demonstrated greater-than-anticipated resilience. However, it also reflects both global and domestic economic and political risks.

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Outlook Trend
Mostly stable for state governments. Local governments facing financial pressure from lack of recovery in tax revenues and the prior years reductions in state aid. Revenue supported issuers mostly stable, but continued negative pressure on the housing sector.

Public Finance US
Figure 4 Figure 5

Negative Outlooks
(% of portfolio) 12 10 8 6 4 2 0
Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112

Rating Distribution
Rev. supported Tax supported All

As at 30 Jun 2012
B 0.3% BB 1.8% BBB 8.2% A 26.4% AA 49.8% CCC & below 0.3% AAA 13.2%

(Quarter/year) Source: Fitch Source: Fitch

Key Risks
Rising healthcare, pension and other benefit related costs. Downshifting of state responsibilities to local governments. Weak real estate market. Slow economic recovery.

Outlook Stable for US States

The stable Outlook reflects the recurring budget measures that most states took in 2011 and a continued commitment this fiscal year to balance budgets in an environment of slow economic and revenue recovery. States confronted large projected budget shortfalls for fiscal 2012 (which for most states ended 30 June 2012) as the significant federal stimulus funding that supported finances in the downturn expired. Since gaps were closed without undue reliance on one-time solutions in most cases, projected shortfalls that were addressed this year were meaningfully lower. With revenue growth, most states were able to modestly increase funding in key areas such as education. Medicaid continues to present the biggest budget challenge, in addition to other spending pressures such as pensions. Although Medicaid has been a focus of cost control for the states, options are limited by federal mandates. States remain significantly exposed to potential federal funding cuts but Fitch expects them to have time to react to any plans, so near-term risk to budgets is limited.

Local Governments Face Reduced Financial Flexibility

Tepid property tax and state aid growth, combined with growing pension funding costs, has further reduced financial flexibility for local government issuers. The weak real estate market will continue to yield flat-to-minimal increasing assessed valuations and property tax revenue. The ability to reduce expenditure remains key to balancing budgets. Fitch expects this to be accomplished mainly by reducing services or gaining labor concessions, as one-off spending cuts have largely been exhausted. Special tax bonds whose pledge depends on the performance of property taxes without potential offset from either rate increases or expenditure controls are especially at risk as debt service coverage has been eroded.

Housing Negative; Other Revenue Sectors Stable

While the prospects for most segments are stable, the outlook for the tax-exempt housing sector is negative. This reflects a slow economic recovery and the effect of the sovereigns Negative Outlook on state housing finance agencies GSE-guaranteed mortgage-backed securities portfolios. The stable outlook for non-profit hospitals and healthcare systems reflects their ability to maintain profit margins and offset constrained reimbursement increases and weak patient volumes with improved operating efficiencies and capital spending limited to strategic investments. In the public power, strong sector fundamentals, including autonomous ratesetting authority, electric service essentiality, and reliable cash flow, should allow the sector to retain a solid fiscal foundation. The essential services provided by the water and wastewater sector, its monopolistic business nature, and local rate setting are key factors in the sectors performance stability. The outlook for the higher education sector is also stable.

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Outlook Trend
More downgrades likely in eurozone. Greater stability in emerging markets.
Figure 6 Figure 7

Public Finance International

Negative Outlooks
(% of portfolio) 60 50 40 30 20 10 0
Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212

Rating Distribution
As at 30 Jun 2012
AAA 12% AA 14%

B 8% BB 17%

BBB 26% Source: Fitch

A 23%

Source: Fitch

Developed Markets
For IPF, Negative Outlooks now outnumber Stable Outlooks, suggesting that more downgrades are likely. As many subnationals depend on central governments for transfers of varying but significant proportions of their revenues, their ratings are often closely linked to those of the sovereign where they are located. At times of financial stress, the ties often become stronger as central governments may seek additional controls over the expenditure of subnationals, and subnationals themselves may seek to borrow from the sovereign if access to the markets is either too expensive or not available. Deterioration in the ratings of Italy and Spain in H112 has resulted in subnationals in these countries being downgraded but also in ratings compression, with about half of subnational ratings now rated at the level of the sovereign. Reflecting the sovereign ratings, virtually all are on Negative Outlook. In view of the sovereigns remaining on Negative Outlook, further downgrades cannot be excluded and the economic climate, including central government transfers to subnationals, could worsen. Access to financing has become more restricted. Regions and municipalities with special status in these countries continue to be rated above the sovereign in view of their legally enshrined tax raising powers. Subnationals in more highly rated eurozone countries have seen substantial stability in their ratings which, barring any sovereign downgrades, Fitch expects to continue. However as Belgium and France, together with the non-eurozone UK have Negative Outlooks, the possibility of downgrades remains. There has been some pressure on revenues and subnationals are seeking to cut expenses and capital investment in response to smaller central government transfers. Expenses linked to the provision of statutory services may prove harder to cut, limiting flexibility. The downgrades of Italy and Spain explain the large decrease in AA ratings in the past year and the increase in A, BBB and BB rating. Upgrading some of the lowest-rated issuers in Europe has led to a decrease in B ratings.

Key Risks
Ratings of some eurozone subnationals closely linked to sovereign. In eurozone, smaller central government transfers puts pressure on subnational budgets. Rigidities in expenditure may hamper financial flexibility.

Emerging Markets
In Russia structural improvements in management and the economy contributed to upgrades for four regions in H112 and two further regions have a Positive Outlook. Poland, Romania, Turkey also have subnationals with a Positive Outlook, as do Nigeria and Korea. For Poland, Romania, Russia and Turkey, economic growth is likely to slow in 2012, so any upgrades would be selective. In Mexico around a quarter of the National ratings are on Negative Rating Watch or Outlook, often as a result of worsening debt burdens, indicating downgrades are possible. Rating outlooks in other countries suggest greater stability.

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Outlook Trend
Negative pressures are deepest and most urgent in the eurozone. Continued stability in US is expected, but a tenuous economic recovery will need to be sustained and become more broad-based. Sovereign support for banks may result in IDRs getting uplift relative to Viability Ratings.

Financial Institutions
Figure 8 Figure 9

Negative Outlooks
EMEA (% of portfolio) 60 45 30 15 0
Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112

Rating Distribution
NA All

As at 30 Jun 2012
CCC & below 1% B 11% BB 14% AAA 1% AA 6%

EM

A 32%

BBB 35% Source: Fitch

Source: Fitch

Key Risks
Support for banks may pressure sovereign resources and ratings, creating a negative feedback cycle that makes implementation of corrective actions difficult. Austerity measures by sovereigns may produce additional pressure on economies or add to duration of economic weakness. Incremental funding remains highly reliant on secured and or government related sources.

Developed Europe
The risks facing banks in developed Europe remain heightened. The rating outlook is decidedly negative for banks in the peripheral countries, with more stability in the remainder of the region. An improvement in the economic picture will likely accompany credible and durable solutions for the sovereign and bank problems across the region. The recently completed summit of EU leaders offered promise that solutions to the more difficult aspects of the eurozone crisis can be found. But such solutions will take time and are accompanied by execution and implementation challenges. The Greek elections also removed the immediate risk of a disorderly and highly disruptive set of events being put in motion. However, intermediate risks remains due to the lack of a defined plan for Greece. In Spain, there is heightened concern for property markets. The resulting impact on bank solvency is evidence that banks cannot escape the challenges in peripheral countries although the degree of rating impact will vary based on the strength of the sovereign. Fitchs stress tests for Spains banks highlight that the largest banks have the resources to withstand significant further write-offs although the entire bank system requires additional resources. A recently announced programme to provide EUR100bln for Spains banks would cover needs identified in Fitchs extreme stress, but will not in itself return stability to bank ratings in the country.

North America
The credit outlook for US banks continues to be stable. Challenges remain in the form of still weak conditions surrounding residential real estate, funding markets where conditions have improved but have not returned to pre-crisis levels and an operating environment dominated by weak growth and high unemployment. Steps taken to build capital and liquidity should allow banks to meet heightened regulatory standards and to navigate what could be an uneven economic recovery. However, compliance with such standards and adjusting to restrictions on business activities has raised expense levels and pressured revenue growth. Canadian banks continue to demonstrate consistent and relatively robust performance. The Canadian residential real estate market has been a source of growth and some trends in home prices have mirrored those in other markets that later were proven to have real estate bubbles. Fitch has stress-tested the major Canadian banks for a sharp correction in home prices and capital levels have proven to provide an acceptable buffer. However, implications for a correction in real estate prices could have implications beyond the recognition of credit losses as a real estate contraction may manifest in lower consumer spending levels or higher unemployment across construction or related sectors.

Emerging Markets
EM banks remain a bright spot relative to banks in developed markets. Banks are exhibiting solid performance and are maintaining appropriate buffers in the face of decelerating economic growth in some key markets. The dominance of locally sourced funds providing majority of funding needs adds another level of stability and a layer of insulation from the more disrupted developed markets. Earnings capacity and capital levels remain sufficient to absorb expected

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higher levels of asset quality charges. Eurozone issues may dampen trade flows and pressure central and eastern European economies and banking systems. The growth from China will continue to influence conditions in Asia-Pacific as well as some activity in Latin America.

Outlook Trend
Most sector outlooks across the globe are stable Markets with negative sector outlooks include Italy, Russia and French Life.

Insurance
Eurozone concerns are the primary risk that could lead to increased downgrade activity during the balance of 2012. A hypothetical Greek exit from the euro, if orderly, would be expected to have limited impact on insurers, which are less exposed than banks to related contagion risks because of insurers' ability to share losses with policyholders and their lower reliance on shortterm funding. However, a hypothetical disorderly Greek exit could lead to contagion risks that could materially impact European insurers ratings. Many European insurers hold significant asset allocation in sovereign and bank debt creating vulnerability to any weakness in credit quality or liquidity of these securities. Potentially offsetting some potential future stress would be a temporary relaxation of capital requirements by the regulators. Significant disruptions in global capital markets could adversely impact non-European insurance company ratings. Insurers in Ireland, Italy, Portugal and Spain are mostly rated at the same level as the sovereign which, in all cases, remains on Negative Outlook. This signals a risk of further downgrades. In early June 2012, Fitch downgraded the Insurer Financial Strength rating of Mapfre to BBB to align it with the sovereign rating on Spain.
Figure 10 Figure 11

Key Risks
Sovereign risk contagion. Low interest rates. Regulatory capital changes. Uncertain pricing cycle uplift.

Negative Outlooks
EMEA (% of portfolio) 70 60 50 40 30 20 10 0
Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112

Rating Distribution
NA All

As at 30 Jun 2012
B BB 1.0% 3.0% AAA 0.5% AA 8.9%

BBB 36.9%

A 49.8%

Source: Fitch

Source: Fitch

Life
Fitch does not anticipate any meaningful risk from a potential run on eurozone life insurers by policyholders in the event of consumer panic, because insurers' exposure to guaranteed surrender values is minimal. Insurance companies can, and do, impose significant surrender penalties - which deter policyholders and mitigate the impact on the balance sheet Globally, life insurers face earnings pressure, as low interest rates are dampening profitability. Compounding this pressure on earnings is an increase in hedging costs. The recent extension of Operation Twist by the US Federal Reserve is likely to add to this margin pressure. US and Japanese life insurers continue to see modest improvements in their balance sheets, as capital and asset quality continue to rebound from their recent low points.

Non-Life
Operating results in 2012 to date have recovered from last year, when the industry was hit by large catastrophe losses. Competitive underwriting conditions continue to impact underwriting results. Workers compensation, the largest US casualty business line, should improve its weak performance of recent years but is not likely to generate an underwriting gain.

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Fitch expects 2012 will witness improved underwriting performance, though the degree of any favourable swing may vary by region, as excess capital remains prevalent in various markets which can temper any potential improving trends. Earnings improvement is likely to be modest, and will reflect investment performance, including sovereign activity and low interest rates.

Outlook Trend
Increase in negative outlooks. Slowdown in pace of US upgrades.

Corporates
Figure 12 Figure 13

Negative Outlooks
EMEA (% of portfolio) 60 50 40 30 20 10 0
Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311

Rating Distribution
EM All

NA

As at 30 Jun 2012
CCC & below 1.8% B 15.8% AAA 0.1% AA 1.7% A 19.7%

Key Risks
European recession; slow growth also in US and EM. US federal budget impasse. Acute financial crisis.

Q112

BB 19.5% BBB 41.4% Source: Fitch

Source: Fitch

North America
The outlook trend for credit quality for North American corporates is becoming more negative as lower growth in the US, China and other EMs, as well as the developing recession in Europe, are bound to have a negative impact on revenues and profitability. As many companies have geographically diversified their sales, exposure to Europe is significant in several sectors, such as automotive and manufacturing. A European recession would mainly put pressure on low sub-investment grade entities while investment grade companies should remain less affected. Homebuilding activity in the US has begun to increase from historic lowsand may have hit bottom and begun to recover. Housing starts are up 26% over 2011 year-to date (through May), a large enough number to be unambiguously positive and significant. However, these increases are from levels so low that it will be several years before housing makes its normal contribution to GDP.

EMEA
Fitchs base case forecasts for EMEA corporates continue to include anaemic growth assumptions. Corporates continue to be cautious with capital expenditure, share buyback commitments and, for some, cash dividends are being reduced (whether through scrip or general dividend cuts). The liquidity profiles for peripheral eurozone corporate issuers are adequate, with the majority having sufficient liquidity until 2014. Although 60% of the peripheral portfolio is on RWN or Negative Outlook, this is dominated by utilities in Italy and Spain in turn, reflecting government interference in their remuneration framework. Issuer and sectorspecific factors, rather than EU sovereign downgrades, have been and are expected to be the core driver of adverse corporate rating actions.

Asia-Pacific
The Asian engine is slowing but still remains a strong growth story for corporates. Many business profiles have been adjusted to focus on domestic and regional growth opportunities, at the expense of lower growth developed markets. Slower growth in China continues to have an impact on the region but the rated universe constitutes the best-in-class companies.

High Yield
Buoyant US high-yield bond issuance in H112 has provided strong support for refinancing. As issuer credit profiles have stabilized in recent quarters, slightly tighter market conditions may limit access, especially for lower rated companies. Investor demand should remain relatively
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strong as a benign default rate environment and a lack of higher yielding alternatives will continue to make high-yield bonds an attractive asset class. In Europe, yield-seeking investors do not provide a ready open market for deeper high-yield issuance, thus a EUR220bn wall of refinance risk spanning 2013-2017 for around 300 B/CCC leveraged credits remains an issue, also affecting their existing reluctant bank and CLO creditors. There is greater appetite for stronger BB credits, including fallen angels.

Global Infrastructure and Project Finance

Outlook Trend
Stable with some negative outlooks reflecting regional, industry or asset specific stress.

Global infrastructure and project finance ratings outlooks are broadly unchanged since January 2012, with some new negative outlooks reflecting regional, industry or asset specific stress. Region-related outlook change is focussed in Europe and specifically in the southern region. Industry-related outlook changes centre primarily on merchant power assets in the United States.
Figure 14 Figure 15

Negative Outlooks
NA (% of portfolio) 60 50 40 30 20 10 0
Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212

Rating Distribution
EM All

WE

As at 30 Jun 2012
B 5% BB 8% CCC & below 2% AAA 4% AA 22%

BBB 23% Source: Fitch

A 36%

Source: Fitch

Key Risks
Recession spreading in Europe. Low growth in the US and Latin America. Government budget pressure destabilising project cash flows.

North America and Latin America

Growth in the US and the principal Latin American economies has slowed since the fourth quarter of 2011, though it remains at positive rates. Outlooks remain largely stable, with negative outlooks relating to infrastructure assets with debt structures that depend on additional growth to maintain leverage or liquidity ratios commensurate with their existing ratings. US merchant power generation projects continue to be pressured by low energy prices. Fitch has taken rating actions on merchant facilities severely impacted by historic low natural gas prices. Energy prices in all US markets were driven to extreme lows due to the warm winter, lower demand and the continuing decline of gas prices.

EMEA
Continuing economic and financial stresses within Europe are eroding the core stability of the infrastructure sector. Medium-term prospects for infrastructure assets vary significantly and are driven by a combination of the economic and political dynamic of respective countries, and the relative essentiality of the asset. This is seen primarily in large mature transportation networks in southern Europe where Fitch has revised its outlooks to negative from stable. Having performed in the first downturn, the new recession is now affecting even these stronger assets. Regional airports with high leverage and large refinance requirements have a negative outlook in contrast to the large gateways where the outlook remains stable. The outlook for the renewable energy sector in Europe is stable/negative on concerns that government budget pressures may induce revisions in subsidy, support and incentive regimes. Similarly, although public sector grantors continue to meet obligations on social infrastructure projects, budget pressures can lead to delayed payment or increased dispute.

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Structured Finance
Outlook Trend
Increase in EMEA negative outlooks driven by eurozone sovereign issues to continue. Most US sectors expect continued outlook stabilisation.
Figure 16 Figure 17

Negative Outlooks
EMEA (% of portfolio) 50 40 30 20 10 0
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212

Rating Distribution
NA All

As at 30 Jun 2012
CCC & below 15% B 9% BB 11% BBB 14% A 16% AA 10%

AAA 25%

(Quarter/year)

Note: the data in Figure 16 reflects numbers of tranches giving bias to thinner subordinated tranches at the expense of thicker senior tranches. Subordinated tranches are more likely to have Negative Outlooks, while senior ones are more likely to have a Stable Outlook. Furthermore, senior tranches are usually paid down first, which will increase the proportion of subordinated tranches. Ratings that have moved into distressed categories are not assigned Outlooks. This also affects the relative proportions of Outlooks Source: Fitch

US
Key Risks
Further deterioration in eurozone sovereign issues. Lack of sustained economic recovery in US.

In US Structured Finance (SF), the expectation is for continued stabilisation in the outlook for rating performance. However the pace is now less certain than at the beginning of the year. Economic recovery in the US has slowed, and improvement in unemployment has stalled. Moreover, the negative impact of eurozone volatility on domestic capital markets is more persistent than many anticipated. These factors have risen in relative importance and increased downside risk. ABS should continue to demonstrate the highest level of rating stability among the four major SF sectors while uncertainty on the pace of recovery in the housing market will continue to weigh on RMBS ratings. ABS rating outlooks remain stable or positive for most core sectors, with the exception of student loans. Auto loan ABS rating outlooks remain positive, reflecting low delinquencies, strong used-vehicle values, rapid amortisation of the capital structures, and higher credit enhancement of recent vintages. Credit card ABS continues to have stable rating outlooks, driven by favourable asset performance trends. Downside risk for credit card ABS from a renewed downturn is mitigated by strong credit enhancement and robust structures. In contrast, US federal (FFELP) and private student loan ABS generally continue to have negative rating outlooks. AAAsf ratings on public student loan transactions are typically linked to the US sovereign rating (AAA/Negative) due to government guarantee of the collateral, while private student loan transactions continue to be negatively impacted by high unemployment rates and limited job prospects for recent graduates and aggressive structuring of pre-recession transactions. CMBS rating outlooks continue to be largely stable for higher-rated classes, and current ratings incorporate assumptions of incremental stresses to asset performance and refinancing availability. Negative outlooks are concentrated in lower-rated classes, which are more vulnerable to volatility from underperforming properties. Commercial real estate fundamentals are generally continuing to improve; however trends remain mixed both in terms of property types as well as markets. Multifamily and hotel properties have generally shown faster improvement relative to other property types, such as non-core office properties and retail malls in secondary markets. The long legal final maturity dates of most US CMBS allow an extended period for workout and refinancing of underlying property loans.

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Rating outlooks in RMBS remain broadly negative, reflecting ongoing weakness in asset performance trends. Fitch expects house prices to continue to decline into 2013, with a further 7% decline in real prices expected before sustained stabilisation. Loss severities on liquidated loans have continued to rise due to declining prices as well as further increases in liquidation timelines. Contributing to the negative outlooks are concerns arising from the large inventory of delinquent loans yet to be worked out, constrained mortgage credit availability, and persistently high unemployment. Downside risks remain given the risk of increased unemployment and the prospects for near-term house price stabilisation being pushed far beyond 2013. The Structured Credit sector continues to trend toward greater rating stability, despite mixed performance among different asset types. CLO transactions are benefiting both from stable asset performance trends as well as structural deleveraging, and their rating outlook remains stable. Rating outlooks on TruPS CDOs have further stabilised, reflecting a declining rate of deferrals and defaults within asset portfolios, and meaningful amortization of senior classes in some transactions. SF CDO ratings are already generally distressed, but the impact of weak asset performance trends is being mitigated by amortisation of senior classes, so these are also expected to have a relatively higher degree of rating stability.

EMEA
2012 has seen further deterioration in the European economy particularly within the peripheral eurozone countries. Sovereign downgrades have led to rating caps on the maximum achievable SF rating above the sovereign being implemented in Greece, Ireland, Portugal and most recently Spain. Many senior SF rated tranches in these countries remain on negative outlook reflecting heightened sovereign risk, regardless of asset performance. While low interest rates have helped to support the performance to date of certain underlying SF assets, it is expected that the systemic crisis in the eurozone, absent any credible plan for resolution, will continue have an adverse impact on growth prospects and ultimately on the underlying collateral performance. In the event a Greek euro exit becomes probable, the contagion effect and likely impact upon the wider economy would put pressure on SF ratings, particularly in the peripheral countries Prospects for unemployment will continue to be the key driver of consumer ABS performance. In the UK, increasing unemployment will place upward pressure on delinquency and charge-off levels for credit card ABS, reversing some of the improvement reported since 2009. In Germany, a reduction in unemployment is expected to support strong auto ABS performance. The rating outlook is stable for UK and stable to positive for German auto ABS. Fitch maintains a negative outlook for Italian and Spanish consumer ABS transactions, mainly driven by sovereign and counterparty issues rather than by immediate asset performance concerns. The rating outlook is stable for RMBS from most core countries of which the UK and the Netherlands are the largest. The rating outlook for RMBS for periphery eurozone countries is negative, taking into account sovereign and counterparty risk. With increasing pressure on the periphery, Fitch expects a further deterioration in RMBS performance in Portugal, Greece, Spain, Ireland, and, to some degree, Italy. Although mortgage loans in these markets are predominantly variable rate and interest rates are at historical lows, high and still rising unemployment and the increasing effect of austerity measures are expected to translate into higher arrears in the second half of 2012 and into 2013. The expiry of forbearance measures in Italy and restrictions on repossessions in Ireland are embedded in the agencys assumptions but the volatile situation could see changes to such measures in peripheral countries and could alter Fitchs expectations. Refinance risk continues to be the key concern in CMBS. With banks restricting new lending, pressure is mounting on borrowers and servicers to secure alternative refinancing by maturity. While non-banks such as insurers and fund managers are weighing opportunities to lend on prime collateral, this is unlikely to be sufficient to absorb loans secured by

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secondary/tertiary assets which feature in peak vintage transactions. Consequently, enforcement activity is set to increase as amendment or extension options favoured so far begin to close off in advance of bond maturity. Servicers may have to liquidate collateral in highly unfavourable conditions, depressing recoveries. While ratings take account of this situation, they remain vulnerable to changes in expectations, especially as maturities approach. Across Europe, while the ratings outlook remains stable for CMBS of core prime assets, for non-prime, the ratings outlook remains stable to declining. The outlook for SME CLO ratings in the eurozone core, predominantly from Germany, remains stable. For the periphery, mostly Spain, the outlook for senior ratings is negative due to counterparty risk and/or sovereign ratings while the outlook for many mezzanine and junior ratings is stable to negative driven primarily by asset performance. Low interest rates have supported performance to date but GDP trend is a key driver of SME performance. A level of deterioration is factored in but ratings will remain vulnerable to a deeper downturn developing. Fitch expects the difference in performance between core eurozone countries and peripheral countries to widen further. The performance of leveraged loan CLOs continues to exceed expectations with low default rates and limited credit migration. This sector is again supported by low interest rates, together with a willingness of banks to agree to amend and extend the underlying loans. The main risk remains the approaching refinancing wall, which drives the negative rating outlook on junior leverage loan CLO notes.

Covered Bonds
Since the start of the year rating actions on sovereigns and banks in several eurozone countries caused corresponding downgrades of covered bonds. Countries that have been particularly affected are Cyprus, Greece, Italy and Spain, where most covered bonds remain on rating watch negative with the potential for further deterioration. Also, Fitch has published Exposure Draft: Global Covered Bonds Rating Criteria in which the agency presents potential changes to its rating methodology. If all key proposals were to be implemented then a possible 22 further programmes would be downgraded by one to two notches. The outlook for covered bond programmes in the rest of Europe, Canada, Australia and New Zealand is stable. Overall, the sector shows strong credit fundamentals, with 84 out of 127 programmes rated AAA and 15 in the AA category. In addition, the sector enjoys continued support from global markets and regulation: global investors show a preference for secured debt, new covered bond legislation is due to be passed in several countries and central bank facilities as well as capital regulation treatment favour covered bonds over securitisation and unsecured debt. Risks mainly stem from sovereign finances and the stability of the local banking systems.

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Appendix: Select Related Research
Sovereign
US Fiscal Outlook Mired in Uncertainty (July 2012) Sovereign Review and Outlook (July 2012) Global Economic Outlook New Threats and Old Risks (June 2012) Spain Public Debt Dynamics An Update (June 2012) Japans Public Finances (June 2012) CEE Banks: Model in Transition (May 2012) CEE: Subdued Growth Outlook, Largely Stable Ratings (May 2012) Mexicos Electoral Cycle Neutral for Creditworthiness (May 2012) Portugal: On Track So Far, But Challenges Remain (May 2012) Asia-Pacific Sovereign Credit Outlook (May 2012) China and Latin Americas Creditworthiness (May 2012) France The Challenges Ahead (May 2012) The Future of the Eurozone: Alternative Scenarios (May 2012) Gauging the Benefits, Costs, and Sustainability of U.S. Stimulus (May 2012) Uruguay: Close to Return to Investment Grade (May 2012) Venezuela: A Costly Parallel Fiscal Policy (April 2012) Hong Kong Annual Public Disclosure Report (April 2012) Azerbaijan: After the Oil Boom (April 2012) Hong Kong and Singapore Overcoming Global Financial Turmoil (April 2012) Brazils Current Economic Slowdown is Cyclical (April 2012) Greece: Debt Dynamics Post Private Sector Involvement (April 2012) Sovereign Data Comparator - March 2012 (March 2012) Eurozone Sovereign Snapshot - Q1 2012 (March 2012) Global Economic Outlook Keep Belts Fastened, Bumpy Recovery Ahead (March 2012) Nigeria's Debt Markets - A Rating Agency Perspective (March 2012) UK Public Finances: Overview and Outlook (March 2012) Central Americas Fiscal Dilemma: Growth Versus Debt (March 2012) MENA Outlook: Oil in Troubled Waters (March 2012) 2012 CEE Government Financing Needs (February 2012) Sri Lankas External Finances Under Pressure (March 2012) India's Public Finances: Fiscal Consolidation Back in the Spotlight (February 2012) Asia-Pacific Sovereign Credit Overview - February 2012 (February 2012) 2012 Latin America Government Financing Needs (February 2012) Country Ceiling for Common Monetary Area Members (January 2012) India's Economic Outlook (January 2012)

Public Finance - US
U.S. Public Power Peer Study -- June 2012 (June 2012) Update on California Redevelopment Agencies (June 2012) California Water Agencies (June 2012) Local Fiscal Stress and State Intervention (June 2012) Capital Expenditure Trends Among Nonprofit Hospitals (May 2012) 2011 Median Ratios for U.S. Public Colleges and Universities (May 2012) For-Profit Hospital Quarterly Diagnosis: Fourth-Quarter 2011 (April 2012) Illinois Property Tax Exemption Battle (April 2012) Improving Comparability of State Liabilities (April 2012) Governors Budget a Mixed Bag for California School Districts (March 2012) Ohio School Districts Under Continued Financial Strain (February 2012) U.S. Public Finance Rating Actions 2011 (January 2012) State Housing Finance Agencies Statistical Information (January 2012) 2012 U.S. Public Finance Outlooks (January 2012)

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Public Finance - International
English Registered Social Housing Providers (May 2012) Subnationals Rated Above the Sovereign in the Eurozone (May 2012) Debt Stability Tempers Budget Rigidity of Italian Subnationals (April 2012) Institutional Framework for Russian Subnationals (April 2012) Pressure on National Finances Reaches Public Transport (March 2012) Nigerian States Revenue Dependence on Oil Rising (March 2012) Latin American Capital Cities (March 2012) Institutional Framework for Belgium Subnationals (March 2012) The Pension System in Brazil: Challenges to Subnationals (March 2012) The French Higher Education Sector (February 2012) Rating Indian Local and State Governments (February 2012) Institutional Framework for Spanish Subnationals (January 2012) 2012 Outlook: French Local and Regional Governments (January 2012)

Financial Institutions
US Banking Quarterly Comment: 1Q12 (June 2012) 1Q12 Bank Capital Ratios (June 2012) Greek Exit Scenario for Eurozone Banks (June 2012) The Credit Crisis Four Years On (June 2012) Chinese Banks: Growth of Broad Credit Decelerating But Still Outpacing GDP (June 2012) Japanese Banking Prudential Regulations (May 2012) EM Banking System Datawatch (May 2012) U.S. Banks Deferred Tax Assets (May 2012) Captive Finance Companies (May 2012) Global Bank Rating Trends Q112 (April 2012) Improving Funding Profile for French Banks (April 2012) French Banks Progress on Deleveraging (April 2012) Major Portuguese Banks: Portuguese Banks Remain on Shaky Ground (March 2012) Higher Real Estate Coverage for Spanish Banks (March 2012) U.S. Banks C&I Lending Trends (No Cause for Near-Term Concern, Despite Expected Credit Deterioration) (March 2012) U.S. Banks - CCAR Preview (March 2012) European Banks Use of LTRO (February 2012) U.S. Banking Quarterly Review: 4Q11 (Now For the Cost Cutting) (February 2012) U.S. Housing and Bank Balance Sheets (February 2012) Fitch Core Capital: The Primary Measure of Bank Capitalisation (January 2012)

Insurance
European Insurers Capable of Withstanding Orderly Greek Exit (June 2012) Healthcare Reform Update - Insurance (June 2012) Japanese Life Insurers: Capital Adequacy Improving Steadily (June 2012) Workers' Compensation Insurance Market Update (June 2012) Nordic Insurance: A Strong Industry Set for Growth (May 2012) 2012 Hurricane Season: A Desk Reference for Insurance Investors (May 2012) Title Insurers 2011 Risk-Adjusted Capital Adequacy (May 2012) Asia-Pacific Catastrophes Highlight Limitations in Risk Assessment (May 2012) U.S. Insurance Broker Industry Sector Credit Factors (May 2012) 2012 Global Reinsurance Update (April 2012) Property/Casualty Insurers' Financial Leverage and Debt-Servicing Capacity (April 2012) Commercial Lines Underwriting Performance (April 2012) UK Life Insurers Sheltered from Eurozone Peripherals (March 2012) Insurer Ratings Drop Modestly Over 2007-10, Now Stable (March 2012) Life Insurers' Investment Portfolios (Results of Fitchs Year-End 2010 Survey) (March 2012) Eurozone Sovereign Risks - Impact on Insurers (February 2012) EU Captive Market at Risk From Solvency II (January 2012)

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Corporates
Lagging Equity Performance Unveils Potential Risks for Bondholders (June 2012) Leveraged Finance Weekly (June 2012) Corporates and the Eurozone Crisis An Updated Q&A on Events So Far (June 2012) Corporates in the Eurozone Periphery (June 2012) The Future of the Eurozone The Impact on Corporates (June 2012) U.S. Retail Credit Insights (June 2012) EMEA Corporate Credit View (June 2012) Derivatives and U.S. Corporations (June 2012) Case Studies in Bankruptcy Enterprise Values and Creditor Recoveries (June 2012) Bridging The Refinance Cliff, Volume V (June 2012) Ratings Under a Eurozone Country Redenomination (May 2012) U.S. Pensions and OPEB - Recovery Implications (May 2012) Latin American Corporates with Exposure to Argentina: No Rest for the Weary (May 2012) Scenario: A Euro Redenomination and Corporate Ratings (May 2012) The Impact of Higher Debt Costs on European Leveraged Issuers (May 2012) Global Pharmaceutical R&D Pipeline -- Fourth-Quarter 2011 (May 2012) Scrutinizing Topical Accounting Issues (May 2012) Buybacks Up, Ratings Down: Share Repurchases Leading to More Downgrades (April 2012) U.S. Homebuilding/Construction: The Chalk Line - Spring 2012 (April 2012) The European Refinancing Wall - A Rating Approach (March 2012) Capital Goods Sector Credit Factor Compendium (March 2012) European REITs: Liquid and Less Reliant on Bank Debt (March 2012) Emerging Markets Newsletter - Corporates (March 2012) Sovereign Ownership and Implications on Corporate Ratings in Africa (March 2012) The Global Outlook for Corporates (January 2012) Scenario: Eurozone Shock Case for EMEA Corporates (March 2012)

Global Infrastructure and Project Finance

2012 Mid-Year Update: Australian Transportation (June 2012) Higher Altitude for Brazilian Airports and Airlines: Navigating Through Growing Demand Challenges (June 2012) European Project Bonds: The Jury Is Still Out (May 2012) Construction Risk in Offshore Wind Farms (May 2012) Capital Expenditure Trends Among Nonprofit Hospitals (May 2012) For-Profit Hospital Quarterly Diagnosis: Fourth-Quarter 2011 (April 2012) UK Pub Sector Review (May 2012) UK Social Infrastructure Performance Update (April 2012) Infra-Read Spring 2012 (April 2012) Paying for Predictability U.S. Managed Lanes Projects (April 2012) Refinancing Wall for European Transport Infrastructure (March 2012) Smart Meters Are a Smart Investment (March 2012) Indian Toll Roads: A Bumpy Ride (March 2012) Clouds over Solar Power Project Finance (February 2012) California's Latest Clean Energy Push (January 2012)

Structured Finance
Assessing Tax Risk in German Structured Finance Transactions (June 2012) U.S. Credit Card ABS Stress Test (June 2012) Fitch RMBS Performance Metrics (June 2012) Fitch RMBS Loss Metrics (June 2012) Credit Crisis Four Years on Summary Report (June 2012) EMEA Auto ABS Primer (June 2012) Lending Standards Still Key to Australian Mortgage Delinquency Rates (June 2012) Consumer Over-Indebtedness in France on the Rise (June 2012) U.S. CMBS Stress Test (June 2012) European CMBS Loan Maturity Bulletin - June 2012 (June 2012)

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Fitch European Leveraged Loan CLO Tracker Data File - Jun 2012 (June 2012) European SME CLO Performance Tracker (June 2012) U.S. Structured Finance Snapshot (February 2012) EMEA Structured Finance Snapshot (February 2012) Feedback Analysis: Counterparty Criteria for Structured Finance Transactions (May 2012) Fitch Auto ABS Dashboard - May 2012 (May 2012) U.S. Credit Card ABS Tear Sheet (May 2012) Credit Card Movers and Shakers Q112 (May 2012) In the Auto ABS Drivers Seat (May 2012) Tyre Tracks - Fitch European Auto ABS Index - Q112 (May 2012) US Dealer Floorplan ABS: Robust Dealers in 2012 (Profitable Dealership Network Supporting Solid Asset Performance) (May 2012) UK Credit Card Stress Test Report (May 2012) U.S. RMBS 4Q11 Sustainable Home Price Projection (May 2012) The Student Loan Report Card (May 2012) Fitch U.S. CMBS VintageView (May 2012) Spanish RMBS Stress Test (May 2012) Fitch Bank TruPS CDO Default and Deferral Index (As of April 2012) (May 2012) Fitch Publishes the Updated SME CLO Compare (May 2012) Solvency II and Securitisation: Significant Negative Impact on European Market (April 2012) U.S. CMBS Special Servicing Update: Resolution Strategies 2010-2011 (April 2012) U.S. CMBS Loss Study: 2011 (Cumulative Loss Severity Tops 45%) (April 2012) Liquidity Improves Across Japanese Property Sales Market (April 2012) SF/CVB Refinancing Risk Overview (April 2012) Spanish Repossession and Loan Modification Analysis (April 2012) Flaws in EMEA CMBS Subordination Exposed at Loan Maturity Default (April 2012) Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions (April 2012) U.S. CMBS 2011 Loan Default Study (April 2012) Spanish Repossession and Loan Modification Analysis (April 2012) U.S. RMBS 1Q12 Economic Risk Factors (March 2012) Increased Disclosure Can Offset Investor Distrust (March 2012) U.S. Subprime RMBS Rate of Improvement Stalls (March 2012) EMEA RMBS Losses - 'The Credit Crisis Four Years On' Series (March 2012) U.S. RMBS 3Q11 Sustainable Home Price Projection (March 2012) Principal Reductions Cut Both Ways for U.S. RMBS (March 2012) Container ABS On the Move (Assessing Risks in a Highly Cyclical Asset Class) (February 2012) Italian RMBS Stress Test (February 2012) Impact of Italys Law Decree 70/11 (Decreto Sviluppo) (February 2012) EMEA Structured Finance Snapshot - February 2012 (February 2012) U.S. Structured Finance Snapshot (February 2012) Outlook and Performance Review for U.S. Utility Tariff ABS (February 2012) CLOs, Crisis Management and Structural Nuances - The Credit Crisis Four Years On (February 2012) Frequently Asked Questions in UK Prime RMBS Master Trusts (January 2012) More Than Half of Japanese CMBS Loans in Default (January 2012) Frequently Asked Questions About Dutch RMBS (January 2012) New Guidelines to Mitigate Credit Card Risk in Korea (January 2012) What Will Fly in 2012? - Global Aircraft ABS Outlook (January 2012) Multi-Issuer Cedulas Hipotecarias OC Tracker (January 2012)

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Credit Market Research
2011 Asia-Pacific Structured Finance Transition and Default Study & H212 Performance Outlook (June 2012) Global Covered Bonds 2011 Rating Transition Study (June 2012) Fitch Global Corporate Rating Activity Update - First-Quarter 2012 (May 2012) Fitch U.S. High Yield Default Insight - April 2012 (May 2012) EMEA Corporate Bonds: Rating and Issuance Trends (May 2012) European Senior Fixed-Income Investor Survey Q212 - Resurgence of Sovereign and Bank Concerns as ECB-Induced Relief Abates (May 2012) U.S. Corporate Bond Market: First Quarter 2012 Rating and Issuance Activity (May 2012) European High Yield Chart Book April 2012 U.S. Senior Fixed Income Investors Troubled by Europe, Constructive on U.S. Outlook (March 2012) Fitch Ratings Global Corporate Finance 2011 Transition and Default Study (March 2012) Fitch Ratings Global Structured Finance 2011 Transition and Default Study (March 2012) Fitch Ratings Sovereign 2011 Transition and Default Study (March 2012) Fitch Ratings International Public Finance 2011 Transition and Default Study (March 2012) Fitch Ratings U.S. Public Finance 2011 Transition and Default Study (March 2012) The Credit Outlook Entrenched Eurozone Crisis Challenges Global Rating Stability (January 2012) Covered Bonds Investor Survey Year-End 2011 (January 2012)

Macro Credit Research

US Money Fund Exposure and European Banks: Holding Pattern (May 2012) Basel III: Return and Deleveraging Pressures (May 2012) Gauging the Benefits, Costs, and Sustainability of US Stimulus (May 2012) US Money Fund Exposure and European Banks: A Partial Disengagement (March 2012) US Money Market Exposure and European Banks: Seeking a New Equilibrium (February 2012) Repo Emerges from the Shadow (February 2012)

Credit Policy
Ratings Under Eurozone Country Redenomination (May 2012) Risk Radar (April 2012)

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Analysts Contributing to This Report
Monica Insoll +44 20 3530 1060 monica.insoll@fitchratings.com Mariarosa Verde +1 212 908 0791 mariarosa.verde@fitchratings.com Trevor Pitman (Regional Credit Officer EMEA and APAC) +44 20 3530 1059 trevor.pitman@fitchratings.com Eileen Fahey (Regional Credit Officer US) +1 312 368 5468 eileen.fahey@fitchratings.com Ed Parker (Sovereigns) +44 20 3530 1046 ed.parker@fitchratings.com Vincent Barberio (Public Finance US) +1 212 908 0505 vincent.barberio@fitchratings.com Matthew Taylor (Public Finance - International) +44 20 3530 1094 matthew.taylor@fitchratings.com James E. Moss (Financial Institutions) +1 312 368 3213 james.moss@fitchratings.com Peter Patrino (Insurance) +1 312 368 3266 peter.patrino@fitchratings.com John Hatton (Corporate EMEA and APAC) +44 20 3530 1061 john.hatton@fitchratings.com Timothy Greening (Corporate US) +1 312 368 3205 timothy.greening@fitchratings.com Thomas McCormick (Global Infrastructure and Project Finance) +1 212 908 0235 thomas.mccormick@fitchratings.com Stuart Jennings (Structured Finance) +44 20 3530 1142 stuart.jennings@fitchratings.com Michael Larsson +44 20 3530 1260 michael.larsson@fitchratings.com

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