Madhavi Bokil, Alexios Philippides and Laura Bazer explain how banks’ profit margins and US life insurers’ portfolio yields will benefit from rising inflation and a steeper yield curve in several advanced economies. Plus, Joe Pucella discusses the outlook for US commercial real estate lenders and Neal Epstein talks about Federal Reserve actions that helped money market funds stave off the risk of negative yields.Inside this episode:Joe Pucella discusses the outlook for US commercial real estate lenders and Neal Epstein talks about Federal Reserve actions that helped money market funds stave off the risk of negative yields. (begins at 2:26 mins)Madhavi Bokil, Alexios Philippides and Laura Bazer explain how banks’ profit margins and US life insurers’ portfolio yields will benefit from rising inflation and a steeper yield curve in several advanced economies. (begins at 9:16 mins)Related content:Commercial Real Estate Lenders – US: Change in outlook to stable from negative reflects recovering demand and asset values - We expect property demand and asset values to rise in many CRE sub-sectors over the next 12-18 months, and improved conditions will support the asset quality of lenders' loan portfolios.Money Market Funds – US: Fed's key repo rate increase throws lifeline to money market funds - The demand for high-quality short-term investments is outstripping supply, causing yields to hover near zero. Money market fund returns, and sponsor fees, will remain compressed.Banks – Global: Interest rate cycle shift bodes well for banks' profitability - Rising long-term interest rates are driving a gradual steepening in the yield curve in a number of countries. Provided the trend continues it will boost banks' margins in these jurisdictionsMacroeconomics – US: US inflation indicators rise, but the increase is likely temporary - Inflation measures show acceleration in inflation due to base effects, one-off price increases and surging demand. We expect inflation to temporarily rise, eventually settling around 2%.Life Insurance – US: Life Insurers US: a little inflation is credit positive; a sizable spike would hurt - A modest rise in long-term interest rates, will give a boost to life insurers’ investment income and spread-based earnings 

Manoj Jethani, Laura Bazer and Rory Callagy discuss the reasons for returning the outlooks for global and US life insurance and global asset management to stable from negative. Plus, James Eck updates us on Puerto Rico’s debt settlements.Inside this episode: James Eck updates us on Puerto Rico’s debt settlements. (begins at 1:53 mins)Manoj Jethani, Laura Bazer and Rory Callagy discuss the reasons for returning the outlooks for global and US life insurance and global asset management to stable from negative. (begins at 7:03 mins)Related content:Assured Guaranty Ltd. and MBIA Inc. Proposed Puerto R ico GO and revenue bond settlements clarify recovery rates for financial guarantors - With the significant majority of the guarantors’ Puerto Rico exposures now covered by settlement agreements, we have updated our exposure analysis for the financial guarantors.Life Insurance - US Strengthening US economy supports return to stable outlook - As the vaccine rollout progresses, the improving health and mobility of the US population will spur growth in insurance sales, revenue, and profits.Life Insurance – Cross Region Outlook revised to stable from negative - We have changed the outlook for the global life insurance sector to stable from negative for 2021.Asset Management – Global Outlook changes to stable on higher financial markets, stronger flows - The return to stable reflects a clear improvement in the industry's operating conditions.

Alberto Postigo and Alka Anbarasu discuss the threat of climate change to banks’ asset quality. Plus, Megan Fox and Steve Tu talk about the effects on banks and asset managers of the Biden administration’s new executive order on climate-related financial risk, and Sid Ghosh tells us whether businesses around the world can get insurance coverage for disrupted operations during the pandemic.Inside this episode:Megan Fox and Steve Tu talk about the effects on banks and asset managers of the Biden administration’s new executive order on climate-related financial risk, and Sid Ghosh tells us whether businesses around the world can get insurance coverage for disrupted operations during the pandemic. (begins at 2:37)Alberto Postigo and Alka Anbarasu discuss the threat of climate change to banks’ asset quality. (begins at 8:06)Related content:Insurance – Global: As coronavirus claims slow, risk to profitability recedes - Global coronavirus (re)insured losses will be contained within earnings as losses slow in 2021.Property & Casualty – US: Coronavirus litigation favors US insurers; legislative changes have mixed implications - US courts have largely sided with (re)insurers in litigation related to business interruption insurance, though a large number of cases are still pending.Banks – US: Biden order aims for coordinated assessment and mitigation of banks' climate-related financial risks, a credit positive - The oversight is credit positive for banks because it will contain their financial risk from climate-related and environmental risks.Asset Management – US: Biden executive order on climate-related financial risk benefits ESG focused asset managers  - The executive order clears the way to remove restrictions the prior administration had placed on investing in ESG, which has been a key growth area for asset managers.Banking – Global: Climate change to force further business model transformation for ban - Climate change creates operational and strategic challenges for banks globally as governments transition towards low-carbon economic models, and as physical climate risks become more acute.Banks – Asia-Pacific: Climate risks are growing, with large, diversified banks better positioned to cope - Large, diversified banks are inherently less susceptible to climate risks from a single location or industry. Also, they have been proactive in devising strategies to deal with such risks. 

Vanessa Robert and Marina Cremonese of the Funds and Asset Management team discuss new money market fund regulations proposed in the US and EU after a material flight to quality shook short-term credit markets last year. Plus, Svetlana Pavolva of the Banking team explains the significant social risks facing banks in Commonwealth of Independent States countries.Inside this episode:Svetlana Pavolva of the Banking team explains the significant social risks facing banks in Commonwealth of Independent States countries. (begins at 3:26)Vanessa Robert and Marina Cremonese of the Funds and Asset Management team discuss new money market fund regulations proposed in the US and EU after a material flight to quality shook short-term credit markets last year. (begins at 10:31)Related content:Banks – Commonwealth of Independent States: “Civil unrest and demographic changes pose substantial social risks - Banks in the region are facing substantial social risks stemming from demographic and societal trends, as well as customer relations.Money Market Funds – Cross Region: Money market funds face more rule changes after coronavirus turmoil - Regulators intend to review MMF rules this year after the financial market impact of the coronavirus crisis in March 2020 raised concerns about the sector's systemic risk.Money Market Funds – US: Funds face bear market on flight to quality - Money market funds face two main risks: uneconomic yields on Treasury and government funds and sharp NAV declines for credit-sensitive funds. 

Gersan Zurita of the Credit Strategy and Research team and Semyon Isakov of the Banking team discuss rising inflation in some key emerging markets. Plus, Felipe Carvallo and Mik Kabeya of the Banking team talk about slipping government support for banks in economies that are heavily dependent on oil.Inside this episode:Felipe Carvallo and Mik Kabeya of the Banking team talk about slipping government support for banks in economies that are heavily dependent on oil. (begins at 2:04)Gersan Zurita of the Credit Strategy and Research team and Semyon Isakov of the Banking team discuss rising inflation in some key emerging markets. (begins at 6:48)Related content:Banking System Outlook Update – Mexico: Negative outlook on prolonged recovery and deteriorating government support - We maintain our negative outlook for the Mexican banking system in line with our expectation that less predictable policy response will weigh on economic recovery and government support.Banking System Outlook Update - Saudi Arabia: Negative outlook reflects asset quality pressure and weakening government support - Our outlook for the Saudi banking system is negative. The outlook reflects our view of how the banks' creditworthiness will evolve over the next 12 to 18 months.Banks – Russia: Climbing inflation will boost large bank dominance amid structural shift in funding - Rising inflation has turned real yields on deposits negative, hastening the movement of savings out of term deposits, which will boost large banks dominance.Macroeconomics – Latin America: Pace of inflation quickens but long-term implications will depend on any sustained acceleration - Basic commodity prices have risen by 50% on average over the last 12 months across Latin America, with differing drivers and effects by country. 

Bob Garofalo and Laura Bazer of the Insurance team explain the drivers behind all the M&A transactions in the life insurance industry, and what they mean for credit when the buyers are private-equity firms. Plus, Donald Robertson of the Banking team and Jasper Cooper of the Insurance team answer questions about Archegos and the recent cyber attack on insurer CNA.Inside this episode:Donald Robertson of the Banking team and Jasper Cooper of the Insurance team answer questions about Archegos and the recent cyber attack on insurer CNA (begins at 2:11)Bob Garofalo and Laura Bazer of the Insurance team explain the drivers behind all the M&A transactions in the life insurance industry, and what they mean for credit when the buyers are private-equity firms (begins at 6:39)Related content:Banks – Global: Archegos default highlights credit-negative risk opacity in banks’ prime brokerage activities - Credit Suisse and Nomura reported the possibility of incurring significant losses associated with a hedge fund defaultCNA Financial Corporation: Cybersecurity attack disrupts systems including webpage - The cyberattack could increase CNA's expenses and its reputational and regulatory risks, but its profitability and solid capital position mitigate risks. Its ratings are unchanged.Life Insurance – US: Companies transform business models via M&A, prepare for post-COVID world - Disruptions in life insurers' business models causing the sector to focus on what mattersLife Insurance – US: PE-driven M&A: good for life insurance sellers, less so for remaining policyholders - Robust PE capital markets provide strategic solutions for sellers, but policyholders and creditors can be exposed to greater financial risk under new PE owner.

Fresh off the Asset Management team’s virtual conference, Rory Callagy highlights how asset managers are finding growth – sometimes through acquisitions – in ESG, alternative investments and software solutions. Plus Antonello Aquino of the Banking team discusses the growing environmental risks African banks confront. Inside this episode:Rory Callagy highlights how asset managers are finding growth – sometimes through acquisitions – in ESG, alternative investments and software solutions. (begins at 2:17)Antonello Aquino of the Banking team discusses the growing environmental risks African banks confront. (begins at 8:11)Related content:  Asset Management Week - Available On-Demand​​ - Explore highlights of this 4-day event covering topics such as ESG and its impact on credit, active asset management, rise of M&A, and much more.​Moody's Asset Management Week – Recap: Asset managers scale up to gain edge in ESG, technology, alternative investments - In a fragmented, growth-challenged industry, scale is helping firms obtain technology, expertise and products – including ESG and alternatives – that give them a competitive advantage.Banks – Africa: Banks begin to take stock of intensifying environmental threats - African banks face climate change risk through large loans extended to environmentally sensitive sectors and through the government bonds they hold on their balance sheets 

In a special episode of our Focus on Finance podcast series, Stephen Long, Louise Lundberg and Eugene Tarzimanov of the Banking team join host Carolyn Henson to discuss the prospects for banks around the globe as government economic support measures start to unwind and banks brace for a substantial rise in loan defaults. Many economies are set to rebound this year but banks must factor in continuing uncertainty over the future course of the pandemic.Related content:Banking System Outlook - South Africa:  Weak economy, deteriorating loan quality and profitability drive our negative outlookBanking System Outlook Update – Mexico: Negative outlook on prolonged recovery and deteriorating government supportBanking System Outlook Update – Japan: Long-running structural challenges in a weak economy drive negative outlookBanking System Outlook Update – India: Potential weakening of government ability to provide support drives negative outlookBanking System Outlook Update – Germany: Outlook for German banks remains negative

With cyber risk on the rise, Lesley Ritter of the Cyber Risk team and Megan Fox, Michael Dion and Rokhaya Cisse of the Financial Institutions team discuss our survey and findings on banks’, insurers’ and asset managers’ preparedness for a cyberattack. Related content:Cyber Risk – Global: 2021 Outlook – Cyber vulnerabilities in software supply chains, rising cost of ransomware will be key risksCross-Sector – Global: Credit implications of cyber risk will hinge on business disruptions, reputational effectsCyber Risk – Global: Sunburst attack on public and private entities raises credit risks as extent of breach unfoldsBanks – North America: Cybersecurity strength rests on governance and preventionInsurers, Insurance Brokers and Asset Managers - Global: Survey signals cybersecurity strength, with some differences across sectors, regions.Insurance – US: Surge in ransomware claims drives cyber insurance prices higherP&C Insurance — Global: Battling hidden cyber exposures, insurers position for growing opportunity

Brandan Holmes of the Insurance team and James Leaton of the ESG team discuss why global regulators are zeroing in on financial sector climate risks. Plus, the Asset Management team’s Steve Tu talks about how and why US ESG investments are surging in popularity, and Francisco Uriostegui discusses the benefits and challenges for Mexican pension funds of incorporating ESG screening into investment decisions.Inside the episode:Brandan Holmes of the Insurance team and James Leaton of the ESG team discuss why global regulators are zeroing in on financial sector climate risks.  (begins at)Steve Tu of the Asset Management team talks about how and why US ESG investments are surging in popularity, and Francisco Uriostegui discusses the benefits and challenges for Mexican pension funds of incorporating ESG screening into investment decisions. (begins at)Asset Management Week - Register today!Join Moody’s the week of March 22nd for 4 days of in-depth discussion as we look to answer the question – How are asset managers allocating their capital and efforts to invest in the future growth and competitiveness?Related content:ESG – Global: 2021 outlook – Stimulus, transparency and policy alignment to amplify ESG trend  - As the global economy recovers from the coronavirus pandemic, ESG issues will assume greater importance in the actions of policymakers, regulators, investors and corporate decisionmakers.Insurance – Global: Global insurance regulators increase focus on climate risk  - Regulators around the world are encouraging the insurance industry to improve its understanding of, and ability to manage, the financial risks related to climate change.Allianz, AXA, Swiss Re, Munich Re, Zurich: Retreat from coal reduces liability and stranded asset risk, a credit positive  - Major European (re)insurers are limiting their investment and underwriting exposure to coal. This protects them against climate change liability risk, and the risk of asset stranding.Financial Institutions – Europe: BoE climate change stress tests will reinforce risk management for banks and insurers - Climate change stress tests are credit positive as they will help banks and insurers understand the consequences of climate change for their business, and support their risk management.Insurance – Global: The impact of environmental, social and governance risks on insurance ratings - In this report we explore the environmental, social and governance risks that insurers face, and explain how we incorporate them into our insurance ratings.Funds & Asset Management – US: ESG investment outperformance overcomes investor hesitancy, a key barrier to growth - Environmental, social and governance themed investments have become one of the best performing investment categories in recent years, paving the way for continued growth of this strategy.Asset Managers – Global: Beyond passive, ESG investing is the next growth frontier for asset managers  - ESG is a unique growth opportunity for asset managers because it promises to deliver value in a more holistic manner, getting beyond investment outperformance which is a zero sum game.Funds & Asset Management – Mexico: ESG factors improve risk analysis, but adoption will take time with market limitations - ESG investing could provide useful framework to pension asset managers, but significant changes will be gradual given fewer investment options in the local market and legacy portfolios.