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<ul class="summary-list"><li>S&amp;P Global cut its rating for Israel on Thursday as tensions in the Middle East escalate.</li><li>Israel's economy may suffer if there's a broad and drawn-out conflict, S&amp;P said.</li></ul>S&amp;P Global downgraded Israel on Thursday, warning that escalating tensions in the Middle East could affect its ability to repay debt.The ratings agency cut Israel's sovereign credit score from "AA-" to "A+" while maintaining a negative overall outlook."The recent increase in confrontation with Iran heightens already elevated geopolitical risks for Israel. We expect a wider regional conflict will be avoided, but the Israel-Hamas war and the confrontation with Hezbollah appear set to continue throughout 2024," it said in a <a target="_blank" href="https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3155269">statement</a>.S&amp;P forecast that Israel's overall deficit will rise from about 4% to 8% by the end of this year, mostly due to higher defense spending. It projected that net general government debt is likely to peak at 66% in 2026, and any broadening of the conflict in the Middle East could take an even bigger toll on the country's economy."A wider regional conflict, which is not our baseline scenario, could have a further material negative impact on Israel's security situation and, consequently, its economic, fiscal, and balance-of-payments parameters," S&amp;P said.The downgrade — which puts Israel's credit rating on the same level as countries including China, Bermuda and Kuwait — came as senior US officials told multiple outlets that <a target="_blank" href="https://www.businessinsider.com/explosion-heard-in-iran-according-to-state-media-2024-4">Israel had struck Iran</a> overnight. Tel-Aviv is yet to claim formal responsibility for the attack.Another major credit ratings agency, Moody's, downgraded Israel for the first time in February, citing the impact that the ongoing war in Gaza could have on the country's finances.The Israeli shekel fell 0.2% against <a target="_blank" href="https://markets.businessinsider.com/index/us-dollar-index">the US dollar</a> on Friday as markets digested both the downgrade and the reported strike on Iran, according to data from Refinitiv.

Israel downgraded by another big credit ratings agency as Middle East tensions escalate

Worried about your <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-score/what-is-a-credit-score">credit score</a>? Maybe you weren't before, but now that I mention it you may be wondering when the last time you checked it was. Even if you're pretty sure it's fine, the topic is often enough to <a target="_blank" href="https://www.businessinsider.com/financial-therapist-talk-about-anxiety-money-2023-3">cause a moment of panic</a>, a sinking feeling followed by an "Oh God, what if something's happened?"That little three-digit number is a big deal in our financial lives. It serves as a sort of grade for how you handle money. An A gets you approval for an apartment and a decent rate on your car loan; an F gets your rental application turned down and makes your car insurance more expensive. You might not have even realized it, but your credit report <a target="_blank" href="https://www.businessinsider.com/why-cleaning-up-your-credit-can-help-you-land-a-job-2013-9">could even make a difference in whether you land your next job</a>.The anxiety around credit scores is palpable. It's also lucrative. Credit bureaus, startups, and even one-man operations can make a lot of money by playing into people's fears about their credit. They offer services that monitor credit scores and alert you when yours changes, or they say they can help you repair your damaged credit — for a price, of course. Many of these costly solutions do not work as well as promised or deliver much, if any, bang for your buck."The credit-scoring companies have figured out how to profit on the anxiety of consumers with credit watch and credit monitoring and all of these add-on programs," said Aaron Klein, a senior fellow in economic studies at the Brookings Institution, a nonpartisan think tank. "When companies find a way to profit off of anxiety, they have an incentive to create anxiety."What these companies won't tell you is that the best things to help ease your credit-related worries are cheap, even free. You can check your credit regularly at no cost from a lot of sources — your credit-card company likely tells you your score, and you can access your report weekly free of charge too. Freezing your credit also doesn't run you anything. It's important to be aware of your credit score, but you don't need to obsess over it — or let marketers convince you to pay for a bunch of stuff you don't really need because you're panicked.Around the time of the Super Bowl, I noticed that the Kansas City Chiefs tight end Travis Kelce was appearing in ads for Experian, one of the big three bureaus responsible for keeping track of everyone's credit scores. I <a target="_blank" href="https://www.businessinsider.com/travis-kelce-experian-tv-commercials-nfl-taylor-swift-super-bowl-2024-2">decided to write about it</a> and, in the process, created an Experian account. The company has been hounding me ever since. I get near-daily emails that range from run-of-the-mill product offers and "credit alerts" to nerve-racking warnings that my information may have been part of a data breach. When I click for more information, lo and behold, I'm confronted with a paid service. For $25 a month, I can sign up for "Experian CreditWorks Premium," which includes quarterly credit reports, credit monitoring, and identity protection. Once I decline that offer, which is kind of tricky, I can also find an offer to "lock" my credit for $5 a month. It's similar to a credit freeze, which blocks creditors from accessing your credit file, but can also do things like notify you if someone tries to access your Experian credit report. Here's the thing, though: A lot of the services it's offering are already free."There's no reason ever to pay for credit monitoring," said Chi Chi Wu, a senior attorney at the National Consumer Law Center. "There's no reason to pay for a credit score or pay for service for the credit score."In Wu's view, Experian is an especially bad offender — not just for its suite of likely unnecessary products but because, as part of its standard agreement, the company makes customers agree to mandatory arbitration, meaning you don't get to sue if Experian has a big screwup later. In an email, a spokesperson for Experian said that the company is "committed to financial inclusion" and that its free membership has tools to help consumers improve their financial health. "Millions of members find value in having Experian as their financial co-pilot helping them improve, manage, and protect their financial profile," the spokesperson said. They did not address the arbitration agreement. But Experian is hardly the only company out there selling credit-related services that drain consumer dollars. The credit-monitoring and identity-theft-protection industry, according to IBISWorld, is worth about $5.4 billion in annual revenue. The growth of the industry makes sense — in this day and age, data breaches are constant, and a fraudulent ding on your credit report or someone opening an account in your name can be an enormous headache. Guarding against that outcome seems like a small price to pay for a lot of people, except that paying any price above $0 may not actually be worth it.A <a target="_blank" href="https://www.nclc.org/wp-content/uploads/2022/09/IB_Credit_Monitoring_Arbitration.pdf">2022 brief</a> from the NCLC described credit-monitoring bundles as often "expensive and ineffective" and argued that they failed to meaningfully benefit consumers. It noted that most identity theft takes place in existing accounts, meaning monitoring services that alert consumers to newly opened accounts miss it. They also often fail to catch fraud related to medical services or tax refunds. And even when they do catch identity theft, they do so after the fact."Some people might be like, 'Well, I'd rather pay and not deal with the time,'" Wu said. "But the thing is those products aren't all that effective."A <a target="_blank" href="https://www.gao.gov/assets/gao-17-254.pdf">2017 report from the Government Accountability Office</a> was pretty negative on the whole monitoring and identity-theft-protection business, too, saying it's just not clear how helpful a lot of this stuff is. The report also looked at identity-theft insurance and noted that while it covered expenses related to dealing with the theft, it generally excluded actual financial losses. While credit monitoring falls into the waste-of-money category, other credit-related services can cross over into potentially predatory territory — for example, credit-repair operations. The idea behind these services is pretty simple: Credit reports often include some mistakes that can ding people's scores. So, for a fee, the companies will dispute a bunch of items in hopes of boosting the score. This may improve people's reports temporarily while the disputes are being investigated, but since the firms are basically disputing anything negative, when they lose, everything goes back to how it was, and the customer is just out more money."They're basically charging people with the false promise that they're going to be able to fix their credit reports and credit scores permanently when they can't," said Sarah Chenven, the CEO of Working Credit, a nonprofit that helps people build credit.Credit-repair companies often target people with lower incomes and people desperate to improve their credit reports and scores. Gen Zers and millennials, who <a target="_blank" href="https://www.creditkarma.com/insights/i/state-of-debt-and-credit-report#average-credit-scores">tend to have lower credit scores</a> than older generations and may not have extensive credit files, may be more likely to find themselves looking at a credit-repair service to get negative items off their reports or at some sort of credit-building service to just help them develop a record. Credit-monitoring companies can really appeal to anyone worried about their credit and identity theft. Some of these businesses also make money by marketing various financial products to people — a well-off boomer might get one type of credit-card offer, a struggling student another.The companies also don't do anything people can't do on their own — if there's an error, you can and should dispute it yourself. In fact, credit-repair agencies can be less effective than the average person at getting mistakes wiped from their credit histories because, as Andrew Pizor, a senior attorney at the NCLC, explained, the law says that credit-reporting agencies have to respond only to dispute letters directly from consumers. Credit-repair businesses try really hard to make it seem like disputes are from consumers, and the agencies try just as hard to sniff out whether that's going on."Most of the letters that you're paying for are going into the garbage," Pizor said. He added that if your dispute letters are going unanswered, you don't need a repair service — you need a lawyer.Federal regulators have gone after several companies accused of playing it fast and loose with the way they approach consumers. In 2017, the Consumer Financial Protection Bureau settled with TransUnion over charges related to how it was marketing its products, including credit monitoring, and ordered it to stop deceptive practices. In 2022, it sued TransUnion, accusing it of violating that order. In 2005, it dinged Experian for marketing free credit reports that weren't so free. Last year, the CFPB entered into a $2.7 billion settlement with a ring of credit-repair brands accused of illegally collecting fees for their services. Over a decade ago, the Federal Trade Commission and 35 states reached a $12 million settlement with LifeLock after alleging that it had made false claims about its identity-theft-protection services.These companies and credit-related services aren't necessarily evil. A significant part of the issue is that the ecosystem is a mess. Our credit-reporting and -scoring system is outdated and confusing, and so are a lot of the businesses that have sprung from it. Even the seemingly good products and services out there are a sign of the deep rot at the core of the whole system. Credit-building loans, which are loans designed to help people without much credit history build some, <a target="_blank" href="https://www.consumerfinance.gov/data-research/research-reports/targeting-credit-builder-loans/">can help people get on better financial footing</a>, even if there is usually some cost involved. Immigrants and young people in particular can benefit.Companies such as Credit Karma that let you access a lot of your information easily and for free make it so your credit score isn't such a mystery. The downside there is that they make their money by giving your information to a bunch of third-party financial products and taking a cut if you sign up for one of them. For consumers, the whole thing feels like a maze. It's tough to separate the good actors from the bad and to understand the trade-offs at hand. It's not always clear what you're signing up for, whether you need it, or what you're going to wind up paying."The credit system and the financial system, and I hate to sound a little preachy, but it's a black box," said Ryan Steckler, a vice president of product and general manager at Credit Karma. "Given that situation, we're in the business of empowering our consumers by giving them access to the same data those financial institutions have."It would be neat to be able to say that some concrete help is on the way, but the truth is we're stuck with some not-so-fun realities around credit scores for the foreseeable future. As screwed up as the system is, it's probably not going anywhere anytime soon, <a target="_blank" href="https://www.investopedia.com/terms/c/cash-flow-underwriting.asp">even though there are better alternatives out there</a>.There is this sense of existential dread around credit scores. A negative one can really drag people down. An impaired record makes loans more expensive, makes accessing certain financial products impossible, and may even put your next apartment or job out of reach. Klein, from the Brookings Institution, has recently been conducting focus groups with low-income consumers about their financial knowledge and concerns. He's been shocked at how much credit scores have come up."I was very surprised at the attention to detail folks of more modest income have on the impact of financial products and choices on their credit scores," he said. "The more I thought about it, the more I realized this focus is based on experience. At some point, their low credit score has negatively impacted their lives."Frederick Wherry, a Princeton sociologist who leads the Debt Collection Lab, an initiative focused on understanding debt collection, added: "As soon as we are asked about our credit scores, or in a moment when we can't get something we need or we get it at too high a price, that's when we realize that this thing has been hanging over our heads." It's unwise to bury your head in the sand, ignore your credit score, and hope for the best. But you don't need to obsess over it, let alone spend a bunch of money on it. If you're not in the market for a house or apartment or in need of a new loan, you can freeze your credit for free, meaning no fraudsters can take out a loan in your name. Under federal law, the bureaus have to give you one free credit report a year, and since the pandemic they've been letting people access their reports for free once a week. If you see something weird on your report, you can dispute it on your own. And you really do not need to be checking that much — once a month or once a quarter is fine, kind of like your 401(k)."If you have a credit score over 720 or 780, stop worrying. Don't be obsessed with getting an 800 or 820," Wu said. "This is not your SAT score."If you're in trouble, there are nonprofits out there that can help you figure out what to do, for little or no money."If you've got bad credit, if your credit score is low, where I'd start is with a nonprofit credit counselor," Pizor said.If you want to sign up for identity-theft protection or credit monitoring, fine. But those services aren't a fail-safe, so you'll want to walk in with your eyes wide open. The credit experts I spoke with were very wary about credit repair across the board. The next time you start to worry about your credit score, take a beat. Not to get too woo-woo here, but really, there's only so much you can control."I mean, the magic bullet is building a better system," Wu said.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

The best way to fix your credit score? Ignore it.

The Reserve Bank of India (RBI) may begin lowering <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> around October, provided that external factors like weather conditions and international commodity prices do not cause any disruptions, the credit rating agency, Crisil said in its report. The credit rating agency further anticipated that it expects "two rate cuts this fiscal." It said that the decision of the <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC) decision to hold rates in its recent announcement was due to the elevated <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>. The climate conditions such as weather events are frequently changing and they need to be monitored. Going ahead, it anticipated that the macroeconomic environment would be better, creating a background for a rate cut. "The food challenge to a rate cut is expected to ease as agriculture prospects look better than last year. The monsoon has been above normal (7 per cent above the long period average as of August 7), and sowing has picked up across major foodgrains. As agriculture prospects become clearer by September, we expect it to pave the way for a rate cut," the S&amp;P's arm added in its report. In a move reflecting its cautious approach amid ongoing economic uncertainties, the RBI has decided to keep the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged at 6.5 per cent. The decision to keep the repo rate steady comes amidst persistent concerns about <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword>, which remains above the RBI's target range. The central bank's commitment to bringing inflation down to its 4 per cent target continues to face challenges due to ongoing food inflation and other economic factors. Noting a likely uptick in core inflation, the report added that factors such as international freight costs, geopolitical risks to crude oil prices, and hikes in domestic telecom tariffs could affect this indicator. Anticipating the growth, it added, "The pace of growth of the economy is expected to ease this year, with lower fiscal support as the government pursues <keyword id="20101140" type="General" weightage="20" keywordseo="fiscal-consolidation" source="keywords">fiscal consolidation</keyword>." Announcing the MPC's decision on August 8, RBI Governor Shaktikanta Das expected the real Gross Domestic Product (GDP) growth of 7.2 per cent for the fiscal year 2024-25. Governor Das emphasized that the RBI remains vigilant regarding inflationary pressures and will take necessary actions to maintain price stability while supporting the country's economic recovery. The MPC's decision reflects a balanced approach, aiming to control inflation without stifling growth. The adjustments in repo rate have a direct effect on <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and job creation. The lower interest rates tend to stimulate economic growth by making borrowing cheaper for businesses.

RBI expected to begin rate cuts in October, with two reductions this fiscal: Crisil

<ul class="summary-list"><li>With the interest rate cut, the Fed declared the beginning of the end of the inflation fight.</li><li>Harris likely won't claim victory and risk fueling Trump's narrative that the cut is partisan.</li></ul>When the <a target="_blank" href="https://www.businessinsider.com/federal-reserve-interest-rate-cuts-mortgage-investment-credit-savings-2024-9">Federal Reserve cut interest rates by 50 basis points yesterday</a>, it signaled the beginning of the end of the fight against inflation. <a target="_blank" class="" href="https://www.businessinsider.com/category/kamala-harris">Vice President Kamala Harris </a>should, in theory, be able to claim that as a win — but economists and political scientists say that the political calculus is a bit more complicated than the economic one.As former President Donald Trump <a target="_blank" href="https://www.businessinsider.com/interest-rate-cut-trump-fed-powell-reaction-independence-history-2024-9">insists that the rate cut was fueled by partisan politics</a>, Harris has to thread the needle with her rhetoric, experts told Business Insider. Celebrate the rate cut and she risks fueling Trump's narrative; ignore the rate cut and she doesn't get to claim a <a target="_blank" href="https://www.businessinsider.com/trump-harris-economy-tech-debate-tariffs-taxes-2024-9">desperately needed economic victory</a>."This is a double edged one for Harris," Mark Blyth, a political economist at Brown University, said. "If Harris leans into this and says, 'We told you it's working. Look, the Fed is doing this," there's a way in which you could imagine that is played back against her. But if she doesn't take credit for it, then she doesn't get any credit for it."President Joe Biden's administration, including Harris, has been careful to respect the independence of the Fed, according to Ernie Tedeschi, the chief economist at the Yale Budget Lab. He suspects that Harris is pleased with the cut, but will be "careful" with her rhetoric to avoid bolstering the idea that it was partisan. Republicans are already pushing on the partisanship idea — yesterday, <a target="_blank" href="https://x.com/haleytalbotcnn/status/1836498513015837007">Speaker Mike Johnson</a> said that "the timing is a little suspect," while acknowledging that the news was good for consumers."On the other hand, Vice President Harris is running to be president of the same economy that the Federal Reserve is managing," Tedeschi told Business Insider. "And so I would not be surprised if she made some parallel observations to what we heard from Powell, which is that inflation has clearly come down from its heights in 2022."Trump, for his part, has indicated that he will not respect the independence of the Fed. In April, the Wall Street Journal reported that members of his team were <a target="_blank" class="" href="https://www.businessinsider.com/trump-interest-rate-decisions-restructure-federal-reserve-jerome-powell-wsj-2024-4">crafting plans to give Trump a say in interest-rate cuts.</a> The former president has since backed away from that stance, but the agency's independence remains a question mark should he win in November.Regardless of his plans, both Blyth and Tedeschi anticipate that Trump will <a target="_blank" href="https://www.businessinsider.com/harris-trump-nabj-interview-economy-policy-2024-9">continue talking about inflation</a> on the campaign trail. Blyth said that Trump is compelling because he talks about inflation in terms of people's lived experience, not opaque economic terms about the rate of change in prices."The reason that Trump has been so successful on the inflation front is because he's talking about how the actual level of prices that people experience isn't going down," he said. To put it simply, voters relate to the fact that eggs cost more than they did two years ago, not the pace at which egg prices are changing.Tedeschi agrees, and said that the way macro economists like himself talk about inflation is divorced from how most Americans think about the phenomenon."You look around the world, and incumbents around the world have been losing elections, and they've been losing elections in large part because of inflation," he said. "It is a valid voter concern and it is a proven electoral strategy worldwide, in lots of different democracies so far in this pandemic. So [Trump] is definitely not going to stop."The American people <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-decision-this-week-federal-reserve-powell-inflation-2024-9">won't begin to feel the effects of the rate cute right away</a>. But it could still impact the political environment, even without Harris giving it a ton of air time. Tedeschi said that the technical economic news will show up in an unlikely place: "the vibes.""The combination of declining inflation and the rate cut means that gloomy news coverage about the economy is probably less likely over the next couple of months," Daniel Hayes, a political science professor at George Washington University, told Business Insider. "If that's what happens, people won't be thinking about inflation as much as the election approaches, which is better for the Democrats."With the rate cut, the Fed implicitly gave economists, political commentators, and the media permission to begin talking about the end of inflation, Tedeschi said, meaning that the tone of the conversation will change. He anticipates that Harris will use the rate cut as a "springboard" to <a target="_blank" href="https://www.businessinsider.com/what-us-economy-would-look-like-with-trump-biden-presidency-2024-5">tout her economic plan</a> and continue pointing out how Trump's policies will raise costs for everyday Americans.There's already evidence that Harris is doing just that. When Business Insider asked the Harris campaign for comment on the Fed's decision, they pointed to her press release, in which she acknowledged that the announcement is "welcome news for Americans," but said prices remain too high. After listing some of her economic policies, Harris contrasted her plans with Trump's and said economists believe his agenda will raise inflation.On Thursday Harris began explicitly leaning into the good economic news, at least to an extent. Her <a target="_blank" href="https://x.com/KamalaHQ/status/1836768253432987858">campaign's Twitter account</a> posted about how the S&amp;P 500 and Dow hit an all-time high.But Blyth remains skeptical that the rate cut will have a lasting impact in an election that's been defined by volatility."By three days from now we'll have forgotten about it," he said. "We'll be fighting about something else."

Rate cuts are a double edged sword for Kamala Harris

Indian <keyword id="34984" type="General" weightage="20" keywordseo="airline" source="Orion">airline</keyword> <keyword id="6354887" type="General" weightage="20" keywordseo="industry" source="Orion">industry</keyword> is expecting to prune its <keyword id="9317682" type="General" weightage="20" keywordseo="net-losses" source="Orion">net losses</keyword> to Rs 3,000-5,000 crore in this fiscal from an estimated Rs 17,000-17,500 crore in FY2023 on the back of improved yields and stable cost environment, credit ratings agency <keyword id="6354972" type="General" weightage="20" keywordseo="icra" source="Orion">ICRA</keyword> said on Tuesday. At the same time, ICRA also estimated that domestic air passenger traffic will expand by 8-13 per cent each in FY2024 and FY2025. The <keyword id="164127" type="General" weightage="20" keywordseo="rating-agency" source="Orion">rating agency</keyword> has also maintained its stable outlook on the industry in view of healthy passenger traffic growth, improved yields and a stable cost environment. Building on the fast-paced recovery in FY2023, ICRA at a webinar on Tuesday said it is expecting the domestic air passenger traffic to grow by 8-13 per cent in the ongoing financial year, thereby reaching 150-155 million and surpassing the pre-Covid levels of 141.2 million seen in FY2020. The Industry's net loss (is expected) to shrink to Rs 30-50 billion in FY2024 from an estimated Rs 170-175 billion in FY2023, aided by improved yields and stable cost environment, ICRA said. "The air passenger traffic momentum witnessed in the current fiscal is expected to continue in FY2025, though further expansion in yields from the current levels may be limited. Thus, the industry is estimated to report a similar net loss of ~Rs. 30-50 billion in FY2025 as well," said Suprio Banerjee, Vice President &amp; Sector Head, Corporate Ratings, ICRA Limited. The momentum in air passenger traffic growth is expected to continue in FY2025 as well with a similar estimated year-on-year growth, aided by rising demand for air travel and improving airport infrastructure, ICRA said. During the first eight months of this fiscal, domestic air passenger traffic stood at 100.7 million, witnessing a 17 per cent year-on-year growth, and 5 per cent higher than the pre-Covid levels (8M FY2020) of 95.7 million. Further, the international passenger traffic for Indian carriers, at 23.9 million in FY2023, surpassed the pre-Covid levels, although it trailed the peak levels of 25.9 million in FY2019, ICRA said, adding the same is expected to cross this level in the current fiscal, with an estimated 25-27 million passengers. Moreover, the airlines witnessed better pricing power, as reflected in improved yields and in the spread between revenue per available seat kilometre and cost per available seat kilometre (RASK-CASK) for the airlines, it said. While capacity addition for the industry will continue with the total pending aircraft deliveries of around 1,500, supply chain issues at the aircraft OEMs also mean that the addition could be gradual, ICRA said. Also, a large part of these is towards replacement of old aircraft with new fuel-efficient ones, and with the expected continued growth in passenger traffic, ICRA expects the demand-supply balance to be maintained in the medium-term. Furthermore, a sizeable part of the fleet addition by airlines will also be meant for expanding international operations, it said and added that in FY2023, the share of Indian carriers in international traffic (to and from India) stood at around 42 per cent. This offers adequate growth potential for Indian carriers to gain traction in international traffic over the medium term, the rating agency noted. However, despite a healthy recovery in passenger traffic and improvement in yields, the movement of the latter will remain monitorable amidst elevated ATF prices and depreciation of the Indian Rupee vis-a-vis the US Dollar compared to pre-Covid levels, both of which have a major bearing on the airlines' cost structure, the rating agency noted. The average ATF (aviation turbine fuel) prices stood at Rs 103,189/KL in 9M FY2024, which were 59 per cent higher compared to an average of Rs 64,715/KL during FY2020, albeit a decline of 17 per cent compared to Rs 121,013 /KL in FY2023, it observed. Fuel accounts for 30-40 per cent of the airlines' expenses, while around 35-50 per cent of the airlines' operating expenses 'including aircraft lease payments, fuel expenses, and a significant portion of aircraft and engine maintenance expenses ' are denominated in US dollar terms. "More recently, the Indian aviation industry has been facing significant supply chain issues, resulting in around 20-22 per cent of the total fleet being on the ground currently. "The recent issue related to powder-coating related concerns in engines manufactured by Pratt &amp; Whitney (P&amp;W) is expected to lead to additional aircraft to be grounded by Q4 FY2024 of this fiscal 'amounting to approximately 22-24 per cent of the industry capacity," said Banerjee. This will result in high operating expenses towards cost of grounding, increase in lease rentals due to additional aircraft being taken on lease to offset the grounded capacity, along with increasing lease rates and lower fuel efficiency, which adversely impact the airline's cost structure, and thus overall cash flow generation," he added.

Indian airlines likely to prune losses to Rs 3,000-5,000 cr this fiscal: ICRA

<ul class="summary-list"><li>Moody's told staff in China to WFH before it slashed the country's credit rating. </li><li> Two employees told the FT they believed this was because the company feared retaliation.</li></ul>A US ratings agency reportedly told its employees in China to work from home the week it delivered a damning assessment of the country's economy.Moody's told its China-based staff not to come into the office shortly before it slashed the country's credit rating, per <a target="_blank" href="https://www.ft.com/content/d488bcb8-1ac1-4551-bb8f-49fe6c990ce2">the Financial Times.</a> Two unnamed employees told the FT they believe this is because Moody's was worried it might be questioned by Chinese officials in retaliation.Workers in Beijing and Shanghai were instructed to stay home days before Moody's announced it was <a target="_blank" href="https://www.businessinsider.com/china-economy-debt-crisis-moodys-bonds-evergrande-stock-market-analysis-2023-12">cutting its outlook for the country from "stable" to "negative,"</a> and staff in Hong Kong were reportedly told to avoid traveling to the Chinese mainland."They didn't give us the reason … but everyone knows why," one China-based Moody's employee told the FT. "We are afraid of government inspections.""The Chinese authorities can make trouble for you if they want to," another employee said, who said that Moody's was concerned about what regulators might do following the credit downgrade."Our commitment to maintaining the confidentiality and integrity of the ratings process is paramount and therefore, we cannot comment on internal discussions," a Moody's spokesperson said in a comment to Business Insider. It comes as Western companies operating in the country <a target="_blank" href="https://www.businessinsider.com/china-apple-foxconn-west-business-tax-espionage-2023-10">face increasing pressure</a> amid rising tensions between the US and China, with the US government hitting its geopolitical rival with a series of sanctions in an attempt to cripple China's microchip industry.The offices of US firms Mintz Group, <a target="_blank" href="https://www.cbsnews.com/news/china-raids-arrests-us-business-capvision-bain-mintz-group-security-crackdown/">Bain &amp; Company, and Capvision</a> were all raided earlier this year by Chinese authorities, with some <a target="_blank" href="https://www.bbc.com/news/world-asia-china-65061116">employees being questioned and detained</a>.American companies have also been targeted in other ways, with Chinese regulators effectively scuttling <a target="_blank" href="https://www.nytimes.com/2023/08/16/business/intel-tower-semiconductor-china.html">Intel's $5.4 billion acquisition of Israeli microchip firm Tower Semiconductor</a>, and the Chinese government <a target="_blank" href="https://www.businessinsider.com/china-iphone-ban-office-workers-worry-bosses-apple-huawei-2023-9">banning some officials from using Apple's iPhones</a>.<a target="_blank" href="https://www.businessinsider.com/china-business-risks-sanctions-detentions-us-tensions-espionage-law-2023-5">Updates to its anti-espionage laws, which were passed in April,</a> are also making it tougher for US businesses to operate in China.Despite this, many Western firms seem reluctant to leave unless they have to.<a target="_blank" href="https://www.businessinsider.com/jpmorgan-jamie-dimon-would-cut-ties-with-china-geopolitical-tensions-2023-11">JP Morgan boss Jamie Dimon</a> told the New York Times' Dealbook conference that while the Wall Street bank would pull out of China if the US government ordered it to do so, he didn't think that was likely to happen — unless China invaded Taiwan.The anxiety over operating in China comes as Xi Jinping's regime attempts to kick-start the country's stuttering economy.Moody's warned that China's <a target="_blank" href="https://www.businessinsider.com/china-economy-debt-crisis-moodys-bonds-evergrande-stock-market-analysis-2023-12">stagnant growth and ongoing property crisis</a> could leave it struggling to pay its debts, and said it expected GDP to grow by just 4% in 2024 and 2025.The rating agency's analysis prompted a fierce response, with China's Ministry of Finance <a target="_blank" href="https://www.reuters.com/breakingviews/china-credit-warning-is-well-timed-plea-action-2023-12-06/#:~:text=China%20is%20%E2%80%9Cdisappointed%E2%80%9D%20with%20the%20outlook%20decision%2C%20an%20official,and%20fiscal%20sustainability%20are%20unwarranted.&amp;text=Our%20Standards%3A%20The%20Thomson%20Reuters,are%20those%20of%20the%20author.">saying it was "disappointed</a>" by the decision and the National Development and Reform Commission <a target="_blank" href="https://www.ft.com/content/d488bcb8-1ac1-4551-bb8f-49fe6c990ce2">criticizing the move</a> as driven by "bias and misunderstanding of China's economic outlook".

Moody's told staff to WFH before it slashed China's credit rating as it feared authorities might retaliate: report

Domestic <keyword id="44023" type="General" weightage="100" keywordseo="airlines" source="Orion">airlines</keyword> industry is expected to fly back into profitability next fiscal, for the first time since the outbreak of <keyword id="8764262" type="General" weightage="20" keywordseo="covid" source="Orion">Covid</keyword>, amid easing cost pressures and reduction in leverage to support credit profiles, a report said on Wednesday. As per the report by <keyword id="15318654" type="TOPIC" weightage="60" keywordseo="Credit-Rating" source="TOPIC" sourcekeytype="mutual-fund,budget,investopedia" meta.keywordsubtype="null" meta.seopath="c/credit-rating" meta.entityname="Credit Rating" meta.hostid="153" meta.entityid="credit-rating">credit rating</keyword> agency <keyword id="6359483" type="DOMAIN" weightage="20" keywordseo="crisil" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="crisil" meta.entityname="Crisil Ltd." meta.entityid="11303" meta.seoname="crisil-ltd">Crisil</keyword>, the industry is also likely to pare its net loss by as much as 75-80 per cent year-on-year to Rs 3,500-4,500 crore this fiscal, compared with around Rs 17,500 crore last fiscal. Strong recovery in passenger traffic and easing cost pressures are supporting this turnaround in operating performance of airlines, Crisil said. The projections are based on <keyword id="183985" type="General" weightage="80" keywordseo="crisil-ratings" source="Orion">Crisil Ratings</keyword> <keyword id="15319469" type="TOPIC" weightage="60" keywordseo="Analysis" source="TOPIC" sourcekeytype="mathematics,investopedia" meta.keywordsubtype="null" meta.seopath="a/analysis" meta.entityname="Analysis" meta.hostid="153" meta.entityid="analysis">analysis</keyword> of three airlines that account for around 75 per cent of domestic air traffic. Domestic and international passenger traffic recovered to 90 per cent and 98 per cent, respectively, in the nine months through December this fiscal, compared with the corresponding period of fiscal 2020 (pre-pandemic). Business and leisure travel rebounded strongly even as international scheduled services resumed, it said and added that the festival season has accelerated recovery in the second half. This pace is likely to be maintained next fiscal, as the Indian economy remains resilient in the face of global headwinds, Crisil Ratings said. The removal of fare caps is also helping airlines pass on cost increases, it added. "Next fiscal, we expect passenger traffic to cross the pre-pandemic level and pricing to remain higher by 20-25 per cent over those levels. Consequently, airlines are expected to clock 25-30 per cent <keyword id="15308831" type="TOPIC" weightage="60" keywordseo="Revenue" source="TOPIC" sourcekeytype="business,investopedia" meta.keywordsubtype="null" meta.msid="92973114" meta.seopath="r/revenue" meta.entityname="Revenue" meta.hostid="153" meta.entityid="revenue">revenue</keyword> growth next fiscal vis-a-vis pre-pandemic," said <keyword id="2458345" type="General" weightage="50" keywordseo="gautam-shahi" source="Orion">Gautam Shahi</keyword>, Director, Crisil Ratings. That along with expected moderation in average aviation turbine fuel prices will drive a significant turnaround in operational performance of airlines, enabling them to become profitable next fiscal, <keyword id="214311" type="General" weightage="20" keywordseo="shahi" source="Orion">Shahi</keyword> noted. Profitability will also be aided by lower interest costs, driven by debt reduction owing to privatisation of a large airline in the last quarter of previous fiscal, it said. Moreover, better operating performance and expected equity infusions would keep airlines' <keyword id="10926" type="DOMAIN" weightage="20" keywordseo="reliance" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="reliance" meta.entityname="Reliance Industries Ltd." meta.entityid="13215" meta.seoname="reliance-industries-ltd">reliance</keyword> on debt (excluding lease liabilities) limited over the near-to-medium term. Kshitij <keyword id="6367260" type="General" weightage="50" keywordseo="jain" source="Orion">Jain</keyword>, Associate Director, Crisil Ratings, said: "The aviation sector is also likely to raise equity of Rs 8,000-10,000 crore over the next two fiscals, which will be utilised towards increasing fleet size and revamping the existing fleet." This will provide a much-needed boost to the capital structure, he said. Consequently, dependence on incremental debt (excluding lease liabilities) for airlines would remain limited over the near-to-medium term, as a major part of recent large fleet purchase orders by airlines is expected to be received from fiscal 2026 onwards, and thus support their credit profiles, according to Jain. The rating agency, however, noted that a timely infusion of equity, a debt contracted for capex towards fleet expansion and a resurgence of Covid-19 cases due to the spread of any new virus strains will remain key monitorable. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/mcdonalds-india-north-east-aims-to-hire-1500-employees-from-ngos-by-2025/articleshow/98334922.cms">McDonald's India - North &amp; East aims to hire 1500 employees from NGOs by 2025</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/indian-tech-sector-growth-slows-in-fy23-ceos-cautiously-optimistic-nasscom/articleshow/98335133.cms">Indian tech sector growth slows in FY23, CEOs cautiously optimistic: Nasscom</a>

Domestic airlines industry expected to fly back into profitability next fiscal: Crisil

<ul><li>Fitch's recent downgrade of US debt to AA+ means there are now several states that have a higher credit rating than the federal government.</li><li>The downgrade from Fitch comes 12 years after S&amp;P downgraded US credit to AA+.</li><li>These are the 12 states that have higher credit ratings than the US.</li></ul>There are a dozen US states that now have a higher credit rating than the federal government after <a href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8">Fitch downgraded the US credit rating to AA+ from AAA</a> earlier this week.Fitch's downgrade comes <a href="https://www.businessinsider.com/the-story-behind-sps-downgrade-2011-8">12 years after S&amp;P lowered the US government's debt rating to AA+</a>, and both downgrades are centered around similar concerns: political brinkmanship surrounding the debt ceiling that often leaves the government on the verge of an unprecedented default before a last-minute political fix is made.Also not helping the US government is its ballooning debts, growing interest payments on said debts, a reduction in tax revenues due to several tax cuts in recent years, and a complicated and lengthy process to balance the government's budget.Most US states don't have as dramatic of a political fight when it comes to balancing state budgets, due in part to the fact that many often have one party that has a majority throughout different chambers of the legislature."Fitch believes US state governments are extremely strong credits, with significant autonomy to provide the services that they believe appropriate and impose the taxes needed to fund those services. The very high ratings of most US states reflect their record of using these powers to balance budgets and limit leverage," Fitch Ratings head of US Public Finance Arlene Bohner told Insider.These are the 12 states that have at least two AAA debt ratings from the three rating agencies, compared to the US government's single triple-A rating from Moody's, and its AA+ rating from Fitch and S&amp;P. 12. Texas<div type="image" title="Austin, Texas" height="2853" width="5708" msid="102398346" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa11. Tennessee<div type="image" title="Downtown Memphis Tennessee Skyline at Sunset" height="500" width="1000" msid="102398348" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa10. Georgia<div type="image" title="Atlanta, Georgia" height="3688" width="7376" msid="102398350" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa9. Florida<div type="image" title="Miami Florida" height="1000" width="2000" msid="102398351" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa8. Utah<div type="image" title="a view of downtown Salt Lake City" height="2250" width="4500" msid="102398353" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa7. North Carolina<div type="image" title="Aerial view of downtown Charlotte, North Carolina." height="2850" width="5700" msid="102398354" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa6. Virginia<div type="image" title="Downtown Charlottesville, Virginia." height="3840" width="7680" msid="102398457" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa5. Maryland<div type="image" title="State House of Annapolis" height="2699" width="5400" msid="102398458" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa4. Delaware<div type="image" title="Photo of Wilmington, Delaware" height="1000" width="2000" msid="102398459" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa3. Minnesota<div type="image" title="Downtown Minneapolis, Minnesota." height="2998" width="5997" msid="102398460" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa2. Missouri<div type="image" title="The Kansas City, Missouri skyline." height="640" width="1280" msid="102398461" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AAA Moody's Rating: Aaa1. South Carolina<div type="image" title="Charleston, South Carolina, USA town skyline." height="3000" width="6000" msid="102398462" hostid="261"></div>Fitch Rating: AAA S&amp;P Rating: AA+ Moody's Rating: Aaa

These 12 states now have a better credit rating than the US government

<ul class="summary-list"><li>Shadow banking tops commercial real estate as the most likely source of a credit event, according to a BofA survey.</li><li>Alarm has risen over private credit, given its rapid growth and loose oversight.</li></ul>Bank of America's latest Global Fund Managers survey found that shadow banking has surpassed commercial real estate as the likeliest culprit of a future credit event.Nearly a third of surveyed investors consider the opaque sector of the financial markets the most likely source of future fallout, overtaking the 24% who still see a bigger risk in the property market. In June's survey, commercial real estate held the top spot.<div type="image" title="Bank of America chart comparing likely source of a credit event" height="1352" width="2164" msid="111840550" hostid="261" sizebytes="67136"></div><a target="_blank" href="https://www.businessinsider.com/private-credit-lenders-middle-market-deals-2023-11">Shadow banking</a> refers to a group of lenders outside of the traditional banking system and which are often less regulated. Worries have risen in recent years over <a target="_blank" href="https://www.businessinsider.com/banks-shadow-lenders-1-trillion-fed-private-credit-hedge-funds-2024-2">unforeseen systemic risks.</a>Outside the purview of regulators, this area of the credit market has ballooned. According to the IMF, it notched <a target="_blank" href="https://markets.businessinsider.com/news/funds/private-credit-risk-leverage-debt-interest-rates-imf-financial-stability-2024-4">$2.1 in assets and capital last year</a>. But while its high returns have attracted investors, the space is dominated by opaque credit quality and infrequent valuations, analysts wrote in April.Top Wall Street commentators have also bashed shadow banking. JPMorgan chief Jamie Dimon went on the offensive last May, warning of bad actors in the industry."There could be hell to pay," he <a target="_blank" href="https://www.businessinsider.com/jamie-dimon-private-credit-market-risks-retail-investors-debt-investing-2024-5#:~:text=%22There%20could%20be%20hell%20to,expect%20there%20to%20be%20problems.%22">then said</a>. "I've seen a couple of these deals that were rated by a rating agency and, I have to confess, it shocked me what they got rated."Meanwhile, BofA's survey indicates that fund managers are still keeping their eyes on commercial real estate, a sector that has wobbled under the weight of high interest rates.Between tighter monetary policy and a significant pullback in office demand, worry has mounted regarding whether commercial real estate entities can pay off their debt. Already, <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-big-trouble-crash-bank-crisis-2024-2">$1 trillion is due to mature by the end of this year</a>, and defaults are hitting even <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-debt-property-losses-mortgage-interest-rates-prices-2024-7">high-quality bonds</a>.Most exposed to the sector are regional banks, and concern <a target="_blank" href="https://www.businessinsider.com/real-estate-ceo-scott-rechler-regional-banks-commercial-real-estate-2023-3">has persisted</a> about consequences in this sector.Otherwise, BofA found that investors remain optimistic overall, with 68% expecting the global economy to achieve a "soft landing." In fact, 39% consider monetary policy as too strong worldwide.Concerning the US, the bank indicated that this enthusiasm may be too strong:"We believe "hard landing" risks are underpriced given the slowdown of US consumer, labor market, government spending… this makes us most bullish on bonds and gold in H2'24," it wrote.Meanwhile, "geopolitical conflict" topped "higher inflation" as the biggest tail risk for the first time in six months, BofA found.

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