Clarity in Credit

Morningstar DBRS
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Join experts from Morningstar DBRS in conversations that go beyond the credit ratings and features in-depth analysis of the latest research, current events, and key credit considerations facing sovereigns, financial institutions, and corporations.

  1. 4d ago

    When Riots Become Catastrophe Risks

    In the latest episode of our Clarity in Credit podcast, Arnaud Journois, Senior Vice President of European Financial Institution Ratings, discusses the insurance and credit implications of the latest riots in France with Marcos Alvarez, Managing Director of Global Financial Institution Ratings. The latest unrest has caused significant damage to commercial premises, public buildings, and vehicles. In this episode, we examine why insured losses should remain material but manageable for French property and casualty insurers; how claims may ultimately be shared among primary insurers, reinsurers, and the French state; and why France is developing a dedicated state-backed riot insurance mechanism. We also discuss how strike, riot, and civil commotion risk is increasingly exhibiting catastrophe-like characteristics because of the potential accumulation of correlated claims across cities and insurance portfolios. KEY HIGHLIGHTS: We expect insured losses from the latest riots in France to remain below EUR 1.2 billion, assuming no further widespread unrest. This would represent a meaningful earnings loss for the French property and casualty insurance industry but would be unlikely, by itself, to become a capital event or materially affect the credit profiles of the country’s major insurers.Primary insurers will initially pay covered claims, but they may not bear the full ultimate cost. Losses can be shared through private reinsurance; specialist strike, riot, and civil commotion coverage; and potential recoveries from the French state under Article L.211-10 of the French Internal Security Code.The overall economic cost is likely to exceed insured losses because important protection gaps remain. Third-party-only motor policies do not cover damage to the insured vehicle, while looting, theft, and business interruption may be excluded, limited, or subject to specific conditions.France is developing a mandatory public-private riot insurance framework supported by the state and managed through Caisse Centrale de Réassurance. The mechanism is not operational for the latest riots but, once implemented, it should provide greater certainty over the allocation of extreme losses and support the continued availability of riot coverage.Civil unrest is increasingly behaving like a catastrophe risk. The key issue is the rapid accumulation of thousands of correlated claims across commercial property, motor, public property, and business-interruption portfolios when unrest spreads across several locations.RELATED RESEARCH  “France's Latest Riots Will Test Insurers Ahead of New State-Backed Riot Insurance Mechanism”,  https://dbrs.morningstar.com/research/491616/  Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/insights/newsletters/490828   By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  2. 4d ago

    The Yield Awakens - Navigating the Impact on Financial Institutions

    In the latest episode of our Clarity in Credit podcast, Eric Chan, Vice President of Global Non-Bank Financial Institutions, and Elena Pérez, Assistant Vice President of Private Corporate Credit, discuss the impact of rising global bond yields across financial institutions with Mike Driscoll, Credit Rating Officer of Global Financial Institution Ratings.  Financial institutions globally have remained resilient despite all the headline noise. Nevertheless, the implications of higher interest rates across the sector have historically been mixed. In this episode, we examine the main drivers behind what we’re currently seeing in the market, assess the sector’s overall performance so far during this cycle, and explore some of the main credit implications and considerations.  KEY HIGHLIGHTS: Despite some differences among jurisdictions, financial institutions have generally proven to be resilient amid ongoing inflation, trade wars, and heightened geopolitical tensions. The major U.S. banks recently reported their Q3 2026 results and expect the operating environment to remain constructive in the near to medium term.Higher rates have increased unrealized losses in accumulative other comprehensive income across the banks that have reported so far. However, their securities books are now smaller and shorter in duration compared with the previous rate hike cycle. Nevertheless, higher rates may eventually pressure earnings, increase credit costs, and raise funding costs.As interest rates rise, noninvestment-grade financial institutions will also likely see higher spreads, as investors can be more selective while earning an attractive yield on less-risky fixed-income securities. Insurance companies, like banks, will likely suffer from unrealized losses, which proper asset-liability matching and hedging can nonetheless offset.Although we remain concerned about the current operating environment, we still expect positive credit rating actions to outweigh negative actions as Positive trends are more prevalent, especially for European banks. The backdrop remains constructive, and most financial institutions have strong balance sheets that can endure stressed environments.RELATED RESEARCH  “Passing Shower or Gathering Storm? Rising Bond Yield Implications for Financial Institutions,” https://dbrs.morningstar.com/insights/commentary/488616Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/insights/newsletters/490828   By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  3. Oct 9

    2026 Wildfires Spread Beyond Physical Climate Risk

    In the latest episode of the Clarity in Credit podcast, Arnaud Journois, Senior Vice President of European Financial Institution Ratings and Jason Graffam, Senior Vice President of Global Sovereign Ratings joined Vitaline Yeterian, Senior Vice President and Sector Lead of European Financial Institution Ratings, to discuss how wildfires and other extreme weather events are translating physical climate risk into financial and credit risk. The conversation examines the implications for European banks, insurers, residential mortgage-backed securities (RMBS) transactions, and sovereigns. Our speakers explore how geography, portfolio concentration, insurance protection, and exposure duration influence vulnerability, and why climate models remain useful for identifying where risks may intensify. The discussion highlights potentially greater risks for geographically concentrated institutions and the broader economic consequences for affected regions. The panel concludes that climate risk increasingly operates through established channels of credit, market, and operational risk, making it an integral part of financial analysis and regulatory oversight.   KEY HIGHLIGHTS Recent European wildfires have brought physical climate risk and its financial transmission channels into sharper focus.Climate models cannot predict individual events, but they can help investors identify vulnerable regions and translate physical climate exposure into financial measures such as probability of default and loss given default.Large European banks are generally protected by their scale and diversification across geographies, sectors, and customers whereas smaller, regionally concentrated banks may be more exposed to repeated severe events.Insurers face a more direct transmission channel through claims, although they can adjust premiums and underwriting conditions as risks evolve. For RMBS, physical damage may remain limited where properties benefit from effective protection or mitigation measures.Geography and time horizon are becoming increasingly important in credit analysis, as similar assets can have different risk profiles depending on location, while longer-term exposures provide more time for climate risks to materialise.Sovereigns can become financial shock absorbers when losses are not covered by private insurance, increasing the importance of public-private catastrophe frameworks, resilient infrastructure, and disaster-recovery funding.The broader risk extends beyond direct asset damage to potential disruption of economic activity, infrastructure, employment, and regional attractiveness, which may ultimately weaken borrowers’ ability to service their debt.Overall, climate risk amplifies traditional credit, market, and operational risks, and is becoming more deeply embedded in banks’ risk-management frameworks.  RELATED RESEARCH  “Climate Risk Data Now Available in European Covered Bond Credit Rating and Surveillance Reports”, https://dbrs.morningstar.com/research/488432“The Summer of 2026: Heatwaves, Wildfires, and Droughts--Weather Extremes Are Stacking Up”, https://dbrs.morningstar.com/research/487811“Beyond the Burned Area: What the 2026 Wildfires Mean for French and Spanish RMBS”, https://dbrs.morningstar.com/research/486319“Fire at Europe’s Urban Edge: Wildfires in Spain and France Test Insurers’ Secondary Peril Defences”, https://dbrs.morningstar.com/research/486187“Climate Risk Navigator: The EBA’s 2027 EU-Wide Stress Test Integrates Climate Risk for Banks”, https://dbrs.morningstar.com/research/485154/“Climate Risk Data Now Available in Morningstar DBRS European RMBS Rating Reports”, https://dbrs.morningstar.com/research/482431“A Large Insurance Gap Is Shaping Europe’s Approach to Catastrophe Risk Sharing”, https://dbrs.morningstar.com/insights/commentary/478610“Climate Risk Navigator - European RMBS HEATMap”,https://dbrs.morningstar.com/research/480803“Climate Risk Navigator: Physical Climate Risk Signals in Credit--Longitude, Latitude, and Exposure”, https://dbrs.morningstar.com/research/476573“Impact of Storm Nils and Heightened Climate Losses on the French NatCat Framework”, https://dbrs.morningstar.com/research/474479“Climate Risk Navigator: Can Insured Losses Become a Proxy to Climate Costs?”, https://dbrs.morningstar.com/research/473212“Beyond the 2026 Wildfires: Physical Climate Risk and European Banks”, https://dbrs.morningstar.com/insights/commentary/490124Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/insights/newsletters/488699/ By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  4. Jul 22

    Telecoms - Enabling the Next Wave of AI Growth

    In the latest episode of our “Clarity in Credit” podcast series, Aarti Magan, Senior Vice President, Corporate Ratings, and Eric Chan, Vice President, Global Non-Bank Financial Institutions, discuss the growing role of telecom operators in the AI ecosystem with Scott Rattee, Senior Vice President and Sector Lead, Corporate Ratings.  In this episode, we examine how telecom providers are evolving beyond their traditional role as connectivity providers to become critical enablers of AI infrastructure, data movement, edge computing, and AI-powered services. We also explore the emerging revenue opportunities associated with data center growth and enterprise AI solutions, investment requirements, and credit considerations associated with participating in this rapidly developing ecosystem. KEY HIGHLIGHTS: Telecom operators are evolving beyond connectivity providers to become key enablers of AI infrastructure, data movement, edge computing, and AI-powered services. Global data center capacity is expected to grow to approximately 200 gigawatts by 2030, driven by rising AI and cloud-computing demand. Facility-based telecom operators are well positioned to capitalize on both data center expansion and enterprise AI solutions given their network expertise and customer relationships. While AI-related investments may pressure credit metrics in the near term, successful execution could enhance competitive positioning, support earnings growth, and be credit positive over the longer term. By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  5. Jun 16

    Game of Thrones in Italy, All Eyes on Siena

    In the latest episode of our “Clarity in Credit” podcast series, Marcos Alvarez, Managing Director of Global Financial Institution Ratings, is joined by Nicola De Caro and Arnaud Journois from the European Financial Institution Ratings team as well as Mario De Cicco from the Global Insurance & Pension Ratings team to discuss the rapidly evolving consolidation landscape in the Italian banking sector, with Banca Monte dei Paschi di Siena SpA (BMPS) at the center of competing strategic moves.  The speakers unpack Banco BPM SpA’s (Banco BPM) proposed merger of equals, Intesa Sanpaolo SpA’s (Intesa) unsolicited bid, and the broader role of players like Unipol Assicurazioni S.p.A. (Unipol) and BPER Banca S.p.A. (BPER). Our analysts explore the strategic rationale behind these transactions; the execution risks; and the implications for competition, market structure, and credit profiles. They also assess how this new wave of consolidation could reshape Italian banking and potentially set a precedent for broader European banking consolidation. KEY HIGHLIGHTS Recent developments around BMPS signal more than isolated deal activity, pointing instead to a renewed and more competitive phase of consolidation in Italian banking, where institutions are vying to become lead consolidators. Banco BPM’s proposed merger of equals aims to create a strong domestic banking group with meaningful scale and synergies, though execution challenges remain significant, particularly around governance and integration. Intesa’s EUR 30.6 billion unsolicited bid represents a decisive and strategic move, reinforcing its leadership position while accelerating consolidation trends both in Italy and potentially across the Eurozone. Unipol plays a pivotal role by enabling deal feasibility through the acquisition of carved-out assets while leveraging the transaction to strengthen its bancassurance model and expand its influence via BPER. While the industrial logic and expected synergies are compelling, execution risk remains the key credit consideration, given the size, complexity, and multi-year timeline of these transactions. From a credit perspective, the transactions are broadly viewed as positive for key players like Intesa and Unipol, supported by stronger scale, diversification, and earnings capacity, though outcomes will ultimately depend on successful integration and evolving deal structures. Overall, the Italian banking sector is entering this phase from a position of strength, but outcomes remain uncertain as the situation continues to evolve. RELATED RESEARCH  “Consolidation Heats Up in Italy Around BMPS Following Banco BPM's Proposal and Intesa's Bid,” https://dbrs.morningstar.com/research/482584 “Game of Thrones in Italy: Intesa Moves on MPS Amid Rival Bid Talks with Banco BPM; Unipol to Step In,” https://dbrs.morningstar.com/research/482587 Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/research/482754 By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  6. May 18

    Middle East Conflict and the Uneven Effects on Energy in Asia

    In the latest episode of our Clarity in Credit podcast series, Eric Chan, Vice President of Global Non-Bank Financial Institutions, and Marcos Alvarez, Managing Director of Global Financial Institution Ratings, discuss the impact of the conflict in the Middle East on Asian sovereigns with Rohini Malkani, Senior Vice President of Global Sovereign Ratings.  The escalation in the Middle East has exposed Asia's dependence on imported hydrocarbons, delivering price shocks and significant physical supply disruptions. Our analysts explore the effects currently playing out across the different regions in Asia, the implementation of varying contingency measures, and the immediate and longer-term implications of a protracted conflict. KEY HIGHLIGHTS With approximately one-fifth of global crude oil and liquified natural gas supply currently constrained at the Strait of Hormuz, and an estimated 83% of that destined for Asian buyers, Asia is not simply a price-taker at this point, but also the region most directly exposed to physical supply disruptions. Exposure is nonetheless not uniform across the region. For example, North Asia has strong crude reserve buffers, while parts of South and Southeast Asia remain more exposed given limited buffers and fiscal space to absorb sustained energy subsidies and/or higher import costs. Contingency measures have varied across countries in managing supply shortfalls and higher import costs. Nevertheless, the current price and supply shock are weighing on growth, raising inflation risks, and complicating monetary-fiscal trade-offs.  Beyond the direct energy shock, higher inputs such as freight, fertilizer, industrial gases, and petrochemicals are also raising production risks across industries and creating broader supply-chain bottlenecks. RELATED RESEARCH  Asia: Middle East Conflict Deepens Energy and Logistics Shock With Uneven Spillovers (March 30, 2026), https://dbrs.morningstar.com/research/477798 Middle East Conflict Delivers an Energy and Maritime Logistics Shock to Asia (March 4, 2026), https://dbrs.morningstar.com/research/475676 Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/research/480642. By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  7. Apr 28

    A Credit Perspective on Middle Market Corporate Borrowers

    In the latest episode of our “Clarity in Credit” podcast series, Aarti Magan, Senior Vice President, Corporate Ratings and Jason Graffam, Senior Vice President, Sector Lead, Global Sovereign Ratings, discuss Middle Market Corporate Borrowers with Michael Dimler, Senior Vice President, Private Corporate Credit.   The health of private credit has become a hot button topic for investors. In this episode, our analysts examine this market through the lens of our credit rating surveillance on middle market corporate borrowers. They explore the challenges facing the sector and how they are shaping the risk appetite of private credit lenders. They also discuss how artificial intelligence (AI)-related disruption and broader technological changes are influencing the credit profiles and ratings of these borrowers.   KEY HIGHLIGHTS The middle market corporate borrowers that we currently rate have a median EBITDA of USD 50 million and an average credit rating of “B.” Middle market private credit fundamentals have weakened, reflecting margin pressure, uneven revenue growth, and higher debt servicing costs. Downgrades continue to outpace upgrades, driven by operating deterioration at the weaker end of the portfolio and limited upward credit rating migration overall. Recent fund-level liquidity pressures and defaults have affected the risk appetites of private credit lenders and increased the competition for high-quality middle market corporate borrowers with strong credit fundamentals and clear sponsor support from top-tier private equity firms. While middle market borrowers in the software sector are facing rising long-term AI disruption risk, the credit profiles in the sector remain supported by entrenched customer relationships and high switching costs. By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

  8. Mar 19

    From Hub to Hazard - War in Iran and the Shifting Map of Middle East Aviation and Sovereigns

    In the latest episode of our “Clarity in Credit” podcast series, Arnaud Journois, Senior Vice President of European Financial Institution Ratings, and Eric Chan, Vice President of Global Non-Bank Financial Institutions, discuss the repercussions of the war in Iran on sovereigns and airlines with Adriana Alvarado, Senior Vice President of Global Financial Institution and Sovereign Ratings and Rohit Kumar, Vice President of Corporate Ratings. The recent escalation of conflict in the Middle East, including widespread airspace closures and disruptions around the Strait of Hormuz, is reshaping sovereign and corporate risk across the region. Our analysts look at the immediate and longer‑term implications for regional economies and global aviation and discuss how the different sectors are navigating this evolving landscape. KEY HIGHLIGHTS Gulf sovereigns face heightened geopolitical and economic uncertainty, with impacts differing across oil‑dependent and more diversified economies. Airspace closures across Iran, Iraq, the Gulf states, and Israel triggered severe aviation disruptions, particularly for Middle Eastern carriers whose operations temporarily came to a halt. Airlines outside the region have been more resilient, as Middle Eastern routes represent a smaller share of their networks, though rerouting challenges persist. With Russian airspace already restricted, additional Middle Eastern closures create a “double bottleneck,” leading to longer flight times, higher fuel burn, and rising operating costs. Fuel prices represent the biggest global risk: sustained increases in oil and jet fuel costs could pressure profitability, especially for airlines with limited hedging. Longer‑term credit implications vary, with Gulf sovereigns relying on substantial financial buffers while airlines’ resilience depends on hedging strategies, liquidity strength, and revenue diversification. RELATED RESEARCH  Most Global Airlines Can Withstand Direct Impact From Middle East Airspace Closure, but Fuel Price Poses Risk, (March 2, 2026), https://dbrs.morningstar.com/research/475508  Conflict in the Middle East Brings Economic Disruptions for the Gulf Countries and Beyond (March 2, 2026),  https://dbrs.morningstar.com/research/475494 Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/research/475929. By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.

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Join experts from Morningstar DBRS in conversations that go beyond the credit ratings and features in-depth analysis of the latest research, current events, and key credit considerations facing sovereigns, financial institutions, and corporations.

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  • Creator
    Morningstar DBRS
  • Years Active
    2025 - 2026
  • Episodes
    16
  • Rating
    Clean
  • Copyright
    © 2025 DBRS Ratings Limited
  • Show Website
    Clarity in Credit