NEW YORK: The coronavirus compounds the challenges already confronting the global auto industry and Moody’s estimates that global light vehicle sales will fall by at least 20pc this year.
According to the rating agency, global light vehicle sales will fall more in North America, Europe, the Middle East and Africa. “Over the past three months, we downgraded 40pc of the auto manufacturers we rate, involving about $130 billion of debt, predicted Moody’s on Wednesday.
Meanwhile, Moody’s predicted that strains on the US small and midsize businesses are credit negative across sectors. The hardships of small and midsize businesses in the coronavirus-triggered recession will weigh on financial institutions, companies with a small business customer base, and certain structured finance transactions.
Moody’s said that all 33 of the largest US banking groups exceeded minimum capital and leverage ratios under the severely adverse scenario in the 2020 Dodd-Frank Act Stress Test. But the Fed is requiring banks to resubmit capital plans that reflect uncertainty stemming from the coronavirus pandemic. That leaves the ultimate results inconclusive, but may lead to credit-positive capital actions later this year, said Moody’s.