MOODYS.COM 16 APRIL 2018 NEWS & ANALYSIS Corporates 2 » For HP, preliminary PC data augurs well for continued market strength » Aperam's acquisition of VDM is credit positive » Status change for French rails SNCF Réseau and SNCF Mobilités is credit negative as reform continues » CEVA's planned IPO is credit positive » Springer Nature's IPO plans are credit positive » China's plan to ease auto import tariffs and foreign-ownership rules would benefit dealers, but pose risks to automakers » Prolonged shutdown of Vedanta's Indian copper smelter would be credit negative and marginally increase leverage Infrastructure 12 » American Water Works' acquisition of Pivotal Home Solutions is credit negative Banks 14 » Fed's proposed stress capital buffer is credit positive for US G-SIBs, credit negative for large US regional banks » Fed's proposed supplementary leverage ratio recalibration is credit negative for systemically important US banks » Bank of America's digital mortgage platform launch is credit positive » For Turkey's banks, currency depreciation is credit negative » Bahraini banks' increased construction and real estate sector concentration is credit negative » State Bank of Pakistan prohibits banks from dealing in virtual currencies, a credit positive Insurers 23 » For China's financial guarantors, supplemental rules to regulations are credit positive Asset Managers 25 » IEP's sale of Federal-Mogul is credit positive Sovereigns 26 » For Croatia, Agrokor’s preliminary debt settlement with creditors is credit positive » For Turkey's economy, the lira's decline to new all-time low is credit negative US Public Finance 29 » US housing finance agencies will benefit from Mortgage Guaranty Insurance Corp.'s reduced insurance premiums RECENTLY IN CREDIT OUTLOOK » Articles in Last Thursday’s Credit Outlook 31 » Go to Last Thursday’s Credit Outlook Click here for Weekly Market Outlook, our sister publication containing Moody’s Analytics’ review of market activity, financial predictions, and the dates of upcoming economic releases. NEWS & ANALYSIS Credit implications of current events 2 MOODY’S CREDIT OUTLOOK 16 APRIL 2018 Corporates For HP, preliminary PC data augurs well for continued market strength On 11 April, IDC, an independent third-party research firm, reported that HP Inc. (Baa2 stable) retained the leading position in worldwide personal computer sales with a 22.6% market share as of March 2018, buoyed by strong business PC demand led by Windows 10 upgrades and an improvement across most geographic regions, particularly Asia-Pacific, a credit positive. Among the top five PC venders, HP and Dell Inc. (Ba1 stable) were the only ones to manage unit growth, with year-over-year growth of 4.3% for HP and 6.4% for Dell. We expect that HP will continue to maintain a very strong position in the PC market, driven by strong execution and solid product offerings across the commercial and consumer segments. HP’s PC unit market share has grown for the past six consecutive quarters to a worldwide lead and company record of 22.6%. For the latest 12 months that ended March 2018, HP increased year-over-year PC unit shipments by 6.3%, compared with a decline of 1.4% for second-place Lenovo, 2.8% growth for third-place Dell and 0.5% growth for the overall PC market. The PC market continues to exhibit stabilizing trends with good commercial PC demand driven by ongoing adoption of Microsoft Corporation’s (Aaa stable) Windows 10 operating system as well as solid demand for premium notebooks in both the consumer and commercial markets. The overall PC market has now shown two consecutive quarters of slight year-over-year growth (up 0.7 percentage point in the quarter ended December 2017 and 0.5 percentage point in the quarter ended March 2018) after declining in 21 of the prior 22 quarters. HP, Lenovo and Dell have a combined 59.9% unit market share, up from 58.2% a year ago, and we expect that they will continue to take market share as smaller competitors that lack scale recede (see Exhibit 1). EXHIBIT 1 PC market grows in first-quarter 2018, with top three vendors continuing to gain share PC units and market share based on latest 12 months Source: IDC We project that HP’s PC revenue will grow for the seventh consecutive quarter, ending April 2018, increasing by high single-digit percentage points based on unit growth and average selling price increases, owing in part to premium mix shift and effective market segmentation. Despite a still-challenging environment for component pricing, we believe PC makers this year have been able to pass along more of their higher costs to buyers as compared with 2017. 0%5%10%15%20%25%050,000100,000150,000200,000250,000300,000350,000400,000Total PC unitsHPLenovoDellRichard Lane Senior Vice President +1.212.553.7863 richard.lane@moodys.com This publication does not announce a credit rating action. For any credit ratings referenced in this publication,