Only four banks passed Forrester Research’s benchmark for online customer service and support.
Excepted from Improving Online Customer Service Availability By Strengthening The Basics: A Review Of Financial, Travel, And Retail Web Sites
Only four of 30 financial services websites sites assessed by Forrester Research met benchmarks for customer service and support. Bank of America, Vanguard, Capital One and SunTrust scored 70 or higher on Forrester’s 100 point scale.
This compares with 14 retail sites and 12 travel sites that met the benchmark. Topping the retail sites were Dell, HP, Best Buy, Wal-Mart, and Sears, all of which scored as high or or higher than Bank of America, the top scoring financial services firm. Carnival, Orbitz and Travelocity topped the rankings of travel sites.
No financial service attained a 100-point score, a level achieved by Best Buy and Carnival. Dell (125) and HP (105) received more than the maximum score due to bonus points for blogs, reviews and forums.
7 out of the 30 financial services sites didn’t even have a link to their customer service section on their home page — just a “contact us” link.
Technorati Tags: (bac), Bank-of-America, banks, Dell, financial-services
The number of corporate debt issuers poised for downgrades declined slightly in the second quarter, but S&P says risks to credit quality remain high.
Excerpted from Credit Trends: Downgrade Potential Across Credit Grades And Sectors
The count of corporate bond issuers poised for downgrades declined slightly to 955 from 965, largely as a result of materialized downgrades. This reduction comes after record highs were reached in nearly every month since January 2008. The tally is 208 issuers more than the levels seen a year ago and 22 more than the trailing-12-month average of potential downgrades.
Further, the global ratio of potential downgrades to potential upgrades at the end of second-quarter 2009 remained at 7 to 1, the same level at the end of the first quarter but more than three times the ratio at the end of second-quarter 2008. Similarly, in the U.S., the ratio was 6 to 1 in the first and second quarters of this year, which is twice that of the same period in 2008.
Despite materialized downgrades throughout the sectors, banks displayed the highest downgrade propensity, closely followed by media and entertainment, insurance, consumer products, and transportation.
Within Standard & Poor’s rated universe, 35% had either a negative outlook or ratings on CreditWatch negative as of Aug. 20, 2009—up from 26% at the end of 2008 and 14% at the end of 2007.
Geographically, the U.S. continues to top the list of potential bond downgrades, with roughly 54% of current ratings showing downside risk (followed by Europe, with 21%).
Indeed, in many of the sectors facing potential downgrades, the proportion of issuers listed with a negative bias is currently at a more elevated level than ever recorded in this credit cycle, highlighting the risks to credit quality. - Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group.
Technorati Tags: banks, consumer-products, corporate bonds, credit-markets, Insurance, media and entertainment, transportation
Fitch Ratings expects auto loan performance to continue to deteriorate, especially for older vintages.
Excerpted from U.S. Auto: Asset Quality Review 2Q09
Despite the weak economy and high unemployment levels, Fitch Ratings saw auto lenders benefit from seasonal trends in the first half of 2009, thanks in part to an improvement in used vehicle values. Still, loss rates continued to increase year-over-year and up-ticks in second quarter delinquency rates, which is a common seasonal trend, signal higher loss rates in the back half of the year. Furthermore, poorer 2006 and 2007 vintages are expected to near peak loss levels in coming quarters and 2008 vintages are tracking at record high levels.
‘Auto lenders continue to contract portfolios across the board, given the tougher credit and capital markets environment, but the lack of competition has allowed lenders the ability to demand better terms on new loans, including higher finance rates and lower loan-to-values,’ said Senior Director Meghan Crowe, ‘but higher credit losses and funding costs combined with the permanence of longer contractual agreements, now an industry standard, are expected to keep net profits for the auto industry below historical levels for some time.’
Still, funding costs have begun to rationalize to some extent, as the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF) has provided more affordable liquidity to the sector. AmeriCredit Corporation, a subprime auto lender, completed a $725 million ABS transaction in July 2009 and was able to sell the non-TALF-eligible subordinated notes, primarily to traditional securitization investors. However, the weighted average coupon and initial enhancement levels of 7.5% and 28.1%, respectively, compare to 5.2% and 9.5% three years ago, when the transactions included bond insurance.
Fitch believes loss and delinquency trends will continue to deteriorate, particularly as older vintages amortize and poorer-performing 2007 and 2008 vintages account for a larger portion of the indices.
Seasonally adjusted cumulative net losses (CNLs) hit an all-time high of 1.25% in June 2009, but the loss rates on 2007 and 2008 vintages are tracking at record high levels, and CNLs on these vintages could reach 3.00% to 3.50%.
Fitch’s outlook for the auto finance industry remains Negative for the remainder of 2009 given high unemployment rates, reduced profitability, and the difficult, albeit modestly improved, funding environment. Fitch took numerous rating actions in the auto space in 2008 to reflect these trends. The long-term Issuer Default Rating (IDR) of Ford Motor Credit Company, for example, has fallen from ‘B’ at the beginning of 2008 to ‘CCC’ while the long-term IDR for AmeriCredit Corporation has gone from ‘BB’ to ‘B-’. While the outlook remains negative, consistent funding availability could ease rating pressure for the non-diversified auto lenders significantly over time. Rating action for larger, more-diversified, non-captive lenders is not likely to be driven by the performance of auto finance businesses alone, although auto segments will continue to contribute to negative rating momentum.
Technorati Tags: auto loan ABS, auto-loans, automotive, structured-finance
Fitch Ratings finds mostly negative trends in residential-mortgage backed securities in Europe.
Excerpted from Around the Houses – Quarterly European RMBS Performance Update Q2 2009
Fitch Ratings says in its Quarterly European RMBS Performance Update that performance indicators generally continue to worsen across Europe, particularly for Spanish and UK non-conforming transactions. However, Italian deals saw a stabilisation of arrears levels during the quarter, mainly due to floating rate loans and a low interest rate environment.
“Performance indicators, such as arrears and default levels, continue to worsen across Europe, although the extent of future potential rating actions will depend on individual transaction characteristics and performance,” says Andy Brewer, Senior Director in Fitch’s RMBS surveillance team. “Many transactions should be able to absorb some deterioration and therefore minimise or avoid negative rating action”
- Arrears levels have increased across all jurisdictions in the last year, most notably in UK and Spanish RMBS.
- Improved affordability has recently reduced the rate of increase in arrears cases, but Fitch believes that rising unemployment has not yet worked through to arrears levels.
- Downgrades continue to be predominantly from UK non-conforming and Spanish transactions, with limited upgrades from any sector.
- The first interest deferrals occurred in Spanish RMBS, and un-cleared principal deficiency ledger balances are building up in some UK non-conforming transactions.
- Prepayment rates continue to decline, despite historically low interest rates, due to reduced mortgage availability.
- Portuguese RMBS saw further performance deterioration while Dutch RMBS performance faltered during the quarter.
Technorati Tags: mortgage-backed-securities, RMBS, structured-finance, U.K. RMBS
Signs are emerging that the nearly year-long trough in demand for personal computers, servers, copiers and other technology hardware may be nearing an end.
Excerpted from U.S. Technology Hardware: Six-Month Update
Moody’s outlook for the U.S-based technology hardware industry is stable, reflecting developing data points and anecdotal evidence that indicate an easing of the sharp global contraction that began in the fourth quarter of 2008. Better-than-expected personal computer sales and improving semiconductor order trends point to firming demand for technology hardware.
- We expect global information-technology spending to increase 2% in 2010 following a 6% decline this year.
- Corporate spending on PCs and other technology hardware has been weak but should improve due to aging of the installed base.
- Consumer PC unit sales have been surprisingly resilient and should rise 5% to 10% next year.
- Average selling prices for PCs will decline this year by about 12% – the high end of the historical range – before firming somewhat in 2010.
- Cash and liquidity will remain solid for the industry. Share-repurchase activity should remain well within the confines of free cash flow.
Despite pockets of stabilizing demand, the tech hardware business will remain at low ebb until worldwide GDP growth rebounds to historic norms.
Our stable outlook indicates that we don’t expect major business drivers such as IT spending and PC unit sales to worsen materially over the next 12 to 18 months. But business conditions will be bumpy.
[ Dell (DELL) reported better-than-expected second second quarter results yesterday, based primarily on cost cutting. Dell's more optimistic outlook led analysts to raise their price targets on the company today.]
than im
Technorati Tags: Dell, hardware, information-technology
Senate passage of a cap-and-trade emissions reduction regime this autumn is less than a 50-50 proposition; it is much more likely that Congress will approve an energy bill that promotes a renewable energy standard for electricity production.
Guest Post from Oxford Analytica
The House of Representatives in June narrowly passed the American Clean Energy and Security (ACES) Act, sponsored by Democrats Henry Waxman of California and Edward Markey of Massachusetts. The bill marked the first time that either chamber of Congress had successfully pushed through legislation to limit US greenhouse gas emissions. President Barack Obama wants to push a similar bill through the Senate to bolster his international credibility ahead of the Copenhagen climate conference in December, but faces an uphill battle.
House ACES legislation. ACES would establish:
- a gradually tightening cap on greenhouse gas (GHG) emissions, designed to cut emissions by 83% below 2005 levels by 2050 (17% below 2005 levels in 2020);
- a renewable energy standard for electric utilities (to require given percentages generation from wind and solar energy);
- funding for carbon capture and storage demonstration plants; and
- additional funding for advanced vehicle technology and battery research.
Business community positioning. While many coal and oil companies continue to oppose any climate legislation, many large businesses — including some energy companies — are supporting the ACES approach. The course of the Senate debate will determine whether a critical mass of businesses get behind the bill:
- Opportunity for deals? Waxman proved to be an effective dealmaker during the debate on ACES. By offering more and more free allocations of carbon credits to businesses, more companies decided to acquiesce and not lobby against the bill. One key concession was his agreement to set aside 15% of all carbon permits in the first 15 years of the programme for energy intensive trade exposed industries, such as cement, iron and steel, and aluminium.
- ‘Price collar’. One idea likely to gain momentum in Senate deliberations is the concept of a ‘price collar’ on a cap and trade system. Such a scheme would impose both a ceiling and floor on carbon prices, and could be seen as a compromise between the business and green camps. Businesses would have an assurance that carbon prices would not raise more rapidly than expected, and volatility would be restrained, while the environmental community would receive assurances that carbon prices would not fall sharply as they have in Europe in the face of recession and other special factors. However, one potential downside to use of a price collar is that it may limit the ability of a US cap and trade system to be integrated with the European Trading System or a future international trading system.
- Technological parochialism. A chronic problem in congressional climate change debates is that many senators or representatives are champions of particular technologies. For example, many conservatives see nuclear power as the only practical solution while legislators from oil and gas producing states tend to believe that expanding domestic production should be top priority. However, several business organisations, including the cross-industry Climate Action Partnership and CEO-based Business Roundtable, are increasingly advocating multi-pronged approaches to climate change — including a blend of all technologies. Given uncertainties involved in technology development, pursuing a diverse portfolio of technologies appears more logical.
Obama’s unwieldy agenda. In the face of lingering worries about prolonged recession, some missteps on his healthcare agenda, and growing concerns about large budget deficits, Obama’s approval ratings have dropped to around 50%. As a result, his ability to force Senate action on climate change is diminished. Even some fellow Democrats now maintain that Obama’s decision to bring up both climate change legislation and healthcare reform in his first year violated a key Washington political tenet — do not overload the system with too many ambitious reforms. It appears that the president’s healthcare imbroglio reduces the chances of Senate action on climate change in 2009.
Outlook. Senate passage of a cap-and-trade emissions reduction regime this autumn is less than a 50-50 proposition; it is much more likely that Congress will approve an energy bill that promotes a renewable energy standard for electricity production.
If cap-and-trade fails this year, Obama may attempt to revisit simpler carbon tax scheme in 2010 as economic recovery gathers pace.
[ A new Washington Post/ABC News poll shows a narrow majority, 52 to 43 percent, back a cap-and-trade system; that margin is unchanged since June.]
Technorati Tags: cap-and-trade, carbon-tax, electricity, emissions, greenhouse-gases
Wilbur Ross says commercial real estate market the next “time bomb” that the market under-appreciates (Reuters TV) http://bit.ly/qBMI2
Unemployment claims falling faster than in half of past recessions – Credit Writedowns – http://shar.es/Vxve
Is microfinance going the same way as subprime mortgages? – The Economist says probably not. http://bit.ly/1og4Ci
New FDIC rules for higher capital levels for PE buyers of banks tougher than they first appear ( FT ALphaville/Reuters) http://bit.ly/zYVet
Two-thirds of U.S. biodiesel production capacity now sits unused, reports the National Biodiesel Board. (WSJ) http://bit.ly/JdSCO
Whole Foods boycott isn’t dinging the company’s stock: http://bit.ly/NPUBT (via @medillmoney) $WFMI http://bit.ly/NPUBT
Useful guide to deciphering executive pay in proxy statements (WSJ) http://bit.ly/kiXwm
REITs are poised once again to pick up the pieces from the commercial-property bust. (WSJ) http://bit.ly/3ESnbH
New reason for blood testing: Study Finds Risk-Taking Increases with Testosterone Levels (via WSJ Deal Journal) http://bit.ly/PbvLb
RT @FTAlphaville Wells Fargo tops American Bankers Assn ranking of US banks’ commercial real estate exposure. http://tinyurl.com/nbvwvj
TransUnion forecasts 90-day credit card delinquency rate at just over 1.2 percent nationally by year-end. http://bit.ly/EgRlq
Technorati Tags: (wfmi), Biofuels, commercial-real-estate, economic indicators, executive-pay, financial-regulation, Microfinance, private-equity, REIT, unemployment, Whole Foods
But a BIS paper suggests that some of the main crisis-affected economies will return to their pre-crisis level of GDP by the second half of 2010.
Excerpted from Financial Crises and Economic Activity by Stephen G Cecchetti, Marion Kohler and Christian Upper
Financial crises are more frequent than most people think, and they lead to losses that are much larger than one would hope. On average, there have been between three and four systemic banking crises per year for the past quarter century. Not all of these have had visible real costs, but most have. In the restricted sample of 40 financial crises that we study, fully one fourth resulted in cumulative output losses of more than 25 per cent of pre-crisis GDP. And one third of the crisis-related contractions lasted for three years or more.
Banking crises are also quite diverse. In fact, those that we study appear to be practically unique in their evolution. In an important sense, the average crisis does not exist. In 16 cases, countries had a positive shift in the level and in 6 cases countries had a negative shift in both the level and the trend.
Nevertheless, by directing a battery of statistical tools at the historical data, we are able to use the variation across crises to learn a number of things that can provide insights into the likely progression of the current crisis. We find that when a banking crisis is accompanied by a currency crisis, it is nearly six quarters longer, and the trough in output is (on average) 6 percentage points lower. And when it comes along with a sovereign debt default, the financial crisis is less severe – one and a half years shorter and 6 percentage points of precrisis GDP less deep.
Furthermore, we show that if the crisis is preceded by low growth – possibly because it is induced by a recession – it tends to be more severe. For each percentage point that GDP growth is lower, the contraction is longer by one quarter and the trough in activity is 1 percentage point lower.
We find that many systemic banking crises have had lasting negative effects on the level of GDP. And even in those cases in which trend growth was higher after the crisis than it had been before, making up for the output loss resulting from the crisis itself took years.
By altering attitudes towards risk, as well as increasing the level of government debt and the size of central banks’ balance sheets, systemic crises have the potential to raise real and nominal interest rates and consequently depress investment and lower the productive capacity of the economy in the long run. We looked for evidence of these effects and found that a number of crises had lasting, negative impacts on GDP. In some countries this was a result of an immediate, crisis-induced drop in the level of real output combined with a permanent decline in trend growth. In other cases, we find that the growth trend increased following the crisis but that the immediate drop was severe enough that it took years for the economy to make up for the crisis-related output loss.
Finally, we were able to find a robust statistical model that can explain a large share of variation in contraction length across past crises. This model predicts that for the current episode, some of the main crisis-affected economies will return to their pre-crisis level of GDP by the second half of 2010.
Technorati Tags: banking-system, economic-policy, financial crisis, GDP, recession, recovery
Much of the growth in social networks is coming from people older than 34 and even a majority of online boomers now use them.
Excerpted from The Broad Reach if Social Technologies by Sean Corcoran
Social technologies continue to grow substantially in 2009. Now more than four in five US online adults use social media at least once a month, and half participate in social networks like Facebook. While young people continue to march toward almost universal adoption of social applications, the most rapid growth occurred among consumers 35 and older.
Social media can no longer be dismissed as a quirky habit of young adults.
Adults younger than 35 approached universal social participation. As we noted last year, adults ages 18 to 24 and those ages 25 to 34 adopt social media similarly. Only three percent of 18- to 24-year-olds and 10% of 25- to 34-year-olds are socially Inactive. What’s more, a staggering 89% of the younger crowd are Spectators, while nearly as many are Joiners. And almost half create content, far higher than any other age group. Adults ages 25 to 34 also grew their participation across all categories — especially in social networks.
- Adults ages 35 to 54 rapidly adopted Joiner activities. Much of the growth in social networks today comes from people older than 34. Compared with last year, this group grew its participation by more than 60%, and now more than half of adults ages 35 to 44 are in social networks. Adults ages 45 to 54 grew their Joiner behavior nearly as much, but still lag behind the 35- to 44-year-olds; 38% of those ages 45 to 54 use social network sites regularly. These consumers also increased their Creator activities to the point where one in five produce social content.
- Adults 55 and older started to share and connect with each other online. Seventy percent of online adults ages 55 and older tell us they tap social tools at least once a month; 26% use social networks and 12% create social content.
Technorati Tags: Facebook, social-media, social-networks, Twitter
Ratings firm sees no signs of a slowdown in the pace of performance deterioration in the EMEA commercial real estate loan universe in the second quarter.
Excerpted from EMEA CMBS Q2 2009: Surveillance Review
The performance of commercial mortgage-backed securities (CMBS) and multi-family transactions in Europe, the Middle East and Africa (EMEA) exhibited further deterioration during Q2 2009. The rating trend of EMEA CMBS in Q2 2009 was significantly negative, with many transactions experiencing multiple notch downgrades, driven mostly by loan performance-related concerns.
Property values decreased further, driven by further increasing property yields and weaker occupational markets. Although Moody’s notes that towards the end of Q2 2009, the yield widening for prime UK commercial properties with beneficial lease profiles slowed down to some extent, the negative commercial property market environment combined with the still limited amount of capital in the market available for commercial real estate investments is putting increasing pressure on securitised loans.
“The number of transactions that experienced adverse events continued to rise during Q2 2009,” says Lifang Chen, a Moody’s Senior Associate and co-author of the report. “The cumulative number of loans on the respective servicer’s watchlists, in default and/or in special servicing continued to increase at a fast pace during the quarter. Meanwhile, the performance of loans was negatively impacted by both the sustained pressure on property values and declining property cash flows as more tenants had difficulties in making rental payments, especially in the retail sector. In addition, the occupational markets showed further signs of weakening as rental values fell and vacancy levels increased in many markets.”
Moody’s expects the deterioration in EMEA CMBS loan performance to accelerate further over the coming months.
“In Moody’s view, the prevalent factor in performance deterioration will be the failure of borrowers to refinance loans with upcoming maturity amid the significant property value declines experienced and the current lack of available financing in most commercial real estate markets,” says Deniz Yegenaga, a Moody’s Associate Analyst. “Even if commercial real estate lending and investment markets recover from their current state, most loans will be highly levered at maturity unless property values recover substantially, which Moody’s does not expect to happen in the near- to medium-term.”
In addition to increased refinancing risk, Moody’s cautions that weaker occupational markets and adverse tenant performance will also result in more loans suffering payment defaults during their term, resulting in further increasing delinquency rates throughout EMEA CMBS transactions over the coming quarters.
“In light of the recent performance of EMEA commercial property markets and the near- to medium-term outlook for future property value developments, principal losses on EMEA CMBS loans are inevitable,” says Ms. Yegenaga. In Moody’s view, due to the expected enforcement timing, which is also driven by the strategy of special servicers, losses on EMEA CMBS transactions will occur in most cases towards the mid to end of the respective transaction term. However, Moody’s expects that first losses will be allocated to certain transactions over the course of the next few quarters. “These losses will relate to defaulted loans for which the servicer and other relevant parties see limited scope for property management and will instead pursue an immediate sale of the mortgaged properties,” adds Ms. Chen.
Technorati Tags: CMBS, commercial-real-estate, Europe, UK
