Daily Update: November 30, 2020

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Millions of Americans traveled during the Thanksgiving holiday this past week, pushing airline activity to the highest levels experienced during the pandemic. A third wave of the coronavirus crisis has devastated the world’s largest economy—infecting 1 million Americans in the first 10 days of November and more than 4.1 million in the entire month, and killing upwards of 266,000 people in the past nine months, according to Johns Hopkins University data.

“What we expect, unfortunately, as we go for the next couple of weeks into December, is that we might see a surge superimposed on the surge we are already in,” Dr. Anthony Fauci, the country’s top infectious disease expert, said in an NBC News interview, referring to new clusters of infections caused by holiday travel. “We’re entering into what’s really a precarious situation.”

Despite the Centers for Disease Control and Prevention’s warnings against traveling and a forecast from the travel non-profit American Automobile Association that 95% of all holiday travel will be conducted by car, more Americans boarded airplanes ahead of Thanksgiving than they have since the pandemic began. More than 6.8 million people traveled by plane in the seven days preceding Nov. 26, and nearly 1.1 million people traveled by air on Wednesday, the day prior to the holiday, according to U.S. Transportation Security Administration data. 

Those figures mark the most passengers screened at U.S. airports since the seven-day period of March 14 to March 20. However, this recent air travel activity is still demonstrably lower from last year’s pre-pandemic levels, when 2.6 million people flew by plane in the U.S. the day before the November holiday. Overall, U.S. Thanksgiving travel is likely to have declined 10% year-over-year, according to AAA. 

Diminished air travel due to the pandemic  has hurt the travel and leisure industries in markets worldwide.

S&P Global Ratings foresees that air traffic this year, measured by revenue passenger kilometers and revenues, is likely to decline 65%-80% year-over-year, with a weak recovery in 2021. The International Air Transport Association expects global passenger numbers to decline nearly 61% this year, to 1.8 billion—a level of activity last seen in 2003.  

Middle Eastern airlines are expected to suffer a 73% decline in passenger demand due to pandemic-related travel restrictions, the largest forecast plunge of all markets, according to the IATA.  In Asia, for the month of October, Singapore Airlines Group reported a 98.1% year-over-year plunge in its passenger demand, and Hong Kong’s Cathay Pacific and the now defunct Cathay Dragon’s passenger numbers likewise declined 98.6%, according to S&P Global Platts.  Additionally, as jet fuel shipments dropped to the lowest level in almost 13 years, South Korea’s exports of refined oil products declined 22.8% year-over-year in October—signaling that the continued weakened aviation industry in Asia and internationally will keep the country’s overseas sales outlook for oil products down.

“Reports that at least one vaccine for COVID-19 could gain initial approval by the end of this year are promising, but widespread availability and acceptance, important for restoring air travel demand, may not occur until the middle of next year,” S&P Global Ratings said in its forecast for the industry earlier this month.

Today is Monday, November 30, 2020, and here is today’s essential intelligence.

S&P Global and IHS Markit to Merge

S&P Global and IHS Markit to Merge in All-Stock Transaction Valuing IHS Markit at $44 Billion, Powering the Markets of the Future

S&P Global (NYSE: SPGI) and IHS Markit (NYSE: INFO) today announced they have entered into a definitive merger agreement to combine in an all-stock transaction which values IHS Markit at an enterprise value of $44 billion, including $4.8 billion of net debt. The transaction brings together two world-class organizations, a unique portfolio of highly complementary assets in attractive markets and cutting-edge innovation and technology capability to accelerate growth and enhance value creation.

—Read the full press release

The Future of Credit

COVID-19- And Oil Price-Related Public Rating Actions On Corporations, Sovereigns, International Public Finance, And Project Finance To Date

In response to investors' growing interest in the coronavirus pandemic and its credit effects on companies, S&P Global Ratings is publishing a regularly updated list of rating actions taken globally on corporations and sovereigns.

—Read the full report from S&P Global Ratings

Coal Producer Peabody Faces Big Challenges As Potential 2nd Bankruptcy Looms

Peabody Energy Corp. spent months touting its ability to generate cash for shareholders during a short-lived boom in global coal markets. However, just over three years after emerging from a bankruptcy reorganization that purged $5 billion in debt from its balance sheet, the largest coal company in the U.S. is on the edge of another potential default.

—Read the full article from S&P Global Market Intelligence

Market Volatility

Lufax IPO A Bright Spot Among Battered Digital Lender Stocks

Lufax Holding Ltd. may have had a rocky public debut, but the Chinese company is unlikely to join the growing list of underperforming digital lending stocks in the U.S. The company's subsequent recovery and premium valuation compared to Chinese peers reflect its strong fundamentals and close ties with a large Chinese financial conglomerate: Ping An Insurance (Group) Co. of China Ltd.

—Read the full article from  S&P Global Market Intelligence

Appalachian NGL Producers Turn To Capital Discipline Even As Prices Rally In Q3

Following a downturn in the second quarter, oil and NGL prices rallied at the start of the third quarter and remained steady throughout. The Brent crude oil futures prompt month contract ranged between $39 per barrel and nearly $46/b during the third quarter, compared to the year-ago range of $56/b to $69/b.

—Read the full article from S&P Global Market Intelligence

Institutional Investors Continued to Sell Midstream Stocks in Q3

Only two of the top publicly traded energy pipeline companies in North America saw institutional ownership increase during the third quarter, with Energy Transfer LP again bearing the brunt of investors' selloff, an S&P Global Market Intelligence analysis of SEC filings shows.

—Read the full article from S&P Global Market Intelligence

Banking Sector Under Pressure

Bradesco Culls Branches More Aggressively Amid COVID-19, Fintech Pressures

Over the course of the COVID-19 pandemic, Banco Bradesco SA has more aggressively cut costs and shrunk its physical presence in Brazil as it positions itself for a continued digital shift, growing competition and lower interest rates.

—Read the full article S&P Global Market Intelligence

As Deal Talks Fail, BBVA Investors Eye Buyback, Sabadell May Pursue Smaller Deal

The breakdown of tie-up talks between Banco de Sabadell SA and Banco Bilbao Vizcaya Argentaria SA will cheer BBVA shareholders who may now look forward to a substantial share buyback, while Sabadell may hunt for a smaller merger partner.

—Read the full article from  S&P Global Market Intelligence

Sharp Fall In UK Banks' COVID-19 Payment Holidays As Job-Support Schemes Remain

British banks granted a higher proportion of payment holidays, as a percentage of loans, than most other banks in Europe during the coronavirus pandemic, but such moratoria have now dropped sharply.

—Read the full article from S&P Global Market Intelligence

Deutsche Bank CEO Said Overhaul was 'Different This Time' – Q3 Shows it Might Be

Group third-quarter revenues increased 13% year over year to €5.94 billion with costs dropping 10% to €5.18 billion. As a result, Deutsche Bank continued to build positive operating leverage, which it has grown for four consecutive quarters, CEO Christian Sewing told analysts at the earnings presentation Oct. 28.

—Read the full article from  S&P Global Market Intelligence

ESG in the Time of COVID-19

U.S. Power Sector Eyes Rapid Battery, Hybrid Solar-Storage Growth In Quest To Decarbonize

U.S. battery storage capacity is expected to be on a steep growth trajectory in the coming years, potentially reaching more than 40 GW by 2030 because of its key role in decarbonizing the power sector, and in particular managing the growth of renewable generation and its impact on power prices.

—Read the full article from S&P Global Platts

Tesla Plans To Turn Berlin Plant Into 'World's Largest EV Battery Plant'

US electric vehicle manufacturer Tesla plans to turns its Berlin-Gruenheide factory into the world's largest EV battery plant, CEO Elon Musk said Nov. 24 at a German government-organized EU battery conference.

—Read the full article from  S&P Global Platts

EU To Use Market Rules And Targets To Destroy Hydrocarbons Demand

The European Commission is busy working on vast swathes of legislation to change market rules and conditions to further favor renewables and energy efficiency, as well as decarbonized gases such ashydrogen

—Read the full article from S&P Global Platts

Asian Private Equity Firms Placing More Emphasis On Environmental Risk In M&A

More private equity firms in Asia are placing a bigger emphasis on environmental risk in assessing mergers and acquisitions as climate-conscious investors are ratcheting up pressure while major governments in the region are accelerating their decarbonization efforts.

—Read the full article from S&P Global Market Intelligence

Saudi Arabia Promotes Circular Carbon Scheme As It Plans To Keep Pumping Oil

Saudi Arabia has used its year in the G20 presidency to promote its circular carbon economy scheme, which it says will lower carbon emissions if adopted worldwide, while maintaining abundant energy supplies.

—Read the full article from S&P Global Platts

The Future of Energy & Commodities

OPEC+ To Meet For Talks On Continuing Oil Cuts, But Members Are Growing Restless

OPEC+ watchers and some delegates say they expect talks could get tense when ministers convene online Nov. 30-Dec. 1. An extension of current output cuts is still the likeliest scenario, but some hard conversations over the future of the deal – and the alliance itself – could complicate a decision.

—Read the full article from S&P Global Platts

Listen: Are High Indian Steel Prices An Outcome Of Supply Shock Or Is A Demand Revival A Reality?

With India's domestic steel prices touching decade high numbers, steelmakers have exited the export markets for good. However, scarcity of supply remains a concern as demand recovery across sectors resurfaces after a long period of subdued activity. The market remains cautious about the sustainability of high prices amid the possibility of recurring COVID-19 waves and domestic iron ore shortages. S&P Global Platts Asian Steel Markets EditorAshima Tyagi discusses these issues and more with Head of APAC Metal Insights Paul Bartholomew.

—Listen and subscribe to Commodities Focus, a podcast from S&P Global Platts

Written and compiled by Molly Mintz.