US election and rating commentary from Fitch

Fitch stated that this year’s presidential election is not expected to directly affect the credit ratings of companies in the country, and added, “Rating actions directly resulting from federal policy changes are rare. However, significant changes in climate and social policies may have long-term implications, particularly for the automotive, energy, healthcare and utilities sectors.” It was conveyed in the statement that corporate credit profiles are believed to be most affected by trade protectionism, persistent fiscal pressures, the withdrawal of climate policy and social policy reform under the Donald Trump administration, while geopolitics and foreign policy, financial liberalization and privatization, and restricted immigration also affect credit profiles, but indirectly. It was noted in the statement that the most likely situation for significant revisions to be made to existing policies in these areas is when Republicans take control of the White House and both houses of Congress. It was noted in the statement that all corporate sectors are exposed to varying degrees to changes in the balance of power in presidential administrations and Congress, and that federal policies and regulations can significantly affect the ability of some sectors to generate profits and cash flows, and ultimately affect asset valuations and capital allocation decisions. The statement noted that passing and implementing new legislation is a long process, and that this will give companies time to adjust their business models to reduce the impact of negative policy outcomes on their financial profiles.