China downgrade shows emerging market ratings stuck in reverse

index.jpgSource : Economic Times 26 May 2017

LONDON: A Moody’s downgrade on China on Wednesday and the likelihood that Brazil and South Africa face further rating cuts in the coming months is highlighting how emerging market credit quality remains stuck in reverse. Since the start of 2014, Reuters analysis shows that the big three rating agencies – S&P Global, Moody’s and Fitch – have racked up more than 150 emerging market downgrades between them.

That averages out a roughly one a week and though there have been hopes that rising global growth and commodity prices will ease the pressure, that does not seem to be occurring yet.

S&P has more negative outlooks — effectively downgrade warnings — than it does positive ones by a score of 26 to 5, its heaviest downward bias ever according to its chief sovereign analyst.

S&P has more negative outlooks — effectively downgrade warnings — than it does positive ones by a score of 26 to 5, its heaviest downward bias ever according to its chief sovereign analyst.

After 20 EM downgrades last year, Fitch has already cut seven countries since the start of this one, including Turkey, South Africa and Saudi Arabia, and El Salvador twice.

Those moves have left it 13 negative outlooks and it thinks the worst may be past. But Moody’s, which delivered China’s first downgrade in 30 years on Wednesday, still has around 25 to resolve.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: