On 18 October, Olivier Beroud, Managing Director at Moody’s London came at IUM to explain the rating methodology and to share his views on corporate bonds risks /opportunities for investors.
Following the polemics on the use of ratings and its economic and political impacts, Olivier started by saying that Moody’s ratings are opinions, given by the whole team in a kind of “democratic way” as everybody (including the junior people) can express his/her views, and based on several key elements: Sovereign analysis, legal and regulatory framework, industry trends, market positions, business risk and management, financial risk and issue structure. Thus, Moody’s ratings have historically proven to be effective predictors of default.
Then Olivier discussed about the topic « Are corporates the new risk free asset class? », and explained through various graphs and metrics that the financial situation of large companies has been improved. He asserted that the liquidity situation remains solid and pinpointed that 86% of B-rated corporates have enough cash to cover all maturities for the next 12 months. Nevertheless, the source of liquidity remains volatile in a fragile economic climate and the recessionary environment continues to force EMEA corporates into maturity extending refinancing, instead of disciplined deleveraging. A today’s threat is that the debt is increasingly relying on tomorrow’s growth for repayment, he concluded.
At the end a few minutes were dedicated on graduate careers and career paths at Moody’s, a “warm” topic for our bachelors and masters students starting a career in the financial sphere soon after their studies.
Reported by Sophie de Lorenzo, Director, IUM Career Services and External Relations