October 2017KEY LINKS»CLO Global Methodology»SME & Mid-Cap FocusAbout usMoody’s CLO/Structured Credit Groupis the leading source for credit ratingsand research on collateralized loanobligations (CLOs) and the entirestructured credit market. The CLO/Structured Credit Group leveragesMoody’s decades of experience inbank loans and high yield as well asour market-leading default studiesto produce the most accurate ratingmethodologies for this asset class.FEATURE ARTICLESEurope - CLOs : Better-than-average credit quality helps offseteffect of competition on telecom and cable issuers' revenue2Telecommunications and media: broadcast & subscription industries together represent thesecond-largest industry exposure among CLO 2.0s we rate.Speculative-grade nonfinancial corporates – Europe: Anoverview of sector credit trends8An overview of key credit trends affecting the largest European speculative-grade sectors, as wellas rating positioning and key credit metrics of companies within each sector.US President Trump’s proposed tax framework is likely creditnegative for US, positive for most sectors15The framework is light on details and is the first step in congressional negotiations.HEARD FROM THE MARKETHeard from the Market: ABS East – Positive tone prevails amidpockets of credit concern16Highlights of the ABS East conference, drawn from observations during panel discussions andmeetings with issuers, investors and other market participants.PERFORMANCE & SURVEILLANCEJuly 2017 Market Pulse: European CLO 2.0 credit qualitydeteriorates19September 2017 Surveillance Update: Deleveraging drivesupgrades24MOODYS.COM FEATURE ARTICLESEurope - CLOs : Better-than-average credit quality helps offset effectof competition on telecom and cable issuers' revenueOriginally published on 16 October 2017SummaryIssuers in the (1) telecommunication and (2) media: broadcast & subscription (TMBS) industries, together the second-largest exposureamong European collateralized loan obligation (CLO) 2.0s we rate, face increased competition contributing in slower growth trendsparticularly for cable operators in 2017. However, the CLO-held TMBS issuers have above-average credit quality, and our outlooks forthe sectors are stable.»Revenue growth rates for cable and telecom will remain low in 2017. Competition between issuers in the two sectors hasincreased as their business models converge to offer a similar suite of products. Affected by competition and some company-specificinternal operational issues, revenue growth rates for both the sectors will broadly converge at around 1% to 2% in 2017, a slightrebound for telecom issuers and a decline for cable issuers.»TMBS combined are the second-largest industry exposure among European CLO 2.0s we rate. The TMBS sectors combinedrepresent 12.4% of the collateral in CLO 2.0s we rate. However, that exposure is highly concentrated in a few names, with the 10largest exposures representing 78% of the total European CLO 2.0 TMBS exposure. And subsidiaries of Liberty Global plc (Liberty)(Ba3 stable) and Altice Luxembourg SA (Altice) (B1 stable) comprise 35% of TMBS exposure.»TMBS issuers have better credit quality than the average CLO-held issuer. Issuers in the TMBS sector have better creditquality than the average CLO-held issuer in European CLO 2.0s we rate.»TMBS sector outlooks are stable. We expect the one-year speculative-grade default rates to remain below 1% for both sectors.Revenue growth rates for cable and telecoms will remain low in 2017Competition amongst cable and telecom issuers, which comprise the vast majority of the joint TMBS universe, has contributed towardsslower revenue growth, particularly for cable over the past two years. As technology has progressed, telecom issuers have broadenedtheir offerings to include television services, while issuers in the cable subsector of the media: broadcast & subscription industrybroadened their offerings to include internet and telephone services. As a result, while their network capabilities continue to differ,the offerings of cable and telecom companies have broadly converged to include television, fixed broadband, fixed telephony and alsomobile.Although intense throughout Europe, competition between cable and telecom issuers is particularly tough in the Netherlands,Switzerland, the United Kingdom, Belgium and France. Some company-specific operational issues, such as poor execution on enforcinga price increase in the U.K. in Q4 2016 and issues associated with the U.K.’s network expansion project in Q1 2017, have also helpedslow revenue growth prospects for European cable companies we rate. On the other hand, emphasis on growing quad-play penetration,improving customer service and product quality via network investments has led to slight improvement in the growth prospects fortelecom issuers we rate.Revenue growth rates for both the sectors will likely converge at around 1% to 2% in 2017, a slight rebound for telecom issuers anda continued decline for cable i