Kroll Bond Rating Agency (KBRA) releases a report on emerging market (EM) sovereign credit risk. While far from a monochromatic group, emerging markets can share some important commonalities that influence sovereign credit.
Many EMs are heavily reliant on commodities, remittances, tourism, and export-led growth. Further, some EMs have weak institutions, limited health services capacity, and large informal sectors, a situation that challenges state control and revenue mobilization. All of these characteristics can combine to make the coronavirus (COVID-19) shock especially scarring to EM economies, with possible implications for their credit profiles. These forces could combine to slow recovery, keep poverty elevated, and strain government finances over the medium term.
In this report, we discuss some overarching themes affecting the sector and also highlight trends (synchronous or divergent) as well as sources of weakness and areas of resilience—credit developments that KBRA continues to monitor across the universe of sovereigns. In addition, we discuss game-changing reforms that could potentially alter several EM economies’ credit profiles in more favorable directions. Ultimately, the policy environment of these countries will play a starring role in stemming the rising credit risks related to COVID-19, although they will remain vulnerable to external developments.
Click here to view the report.
Access for free at www.kbra.com
- Coronavirus (COVID-19): Sovereigns: Broad Shoulders Needed to Soften the Blow
- Coronavirus (COVID-19): KBRA’s Sovereign Ratings Through the Looking Glass
- Coronavirus (COVID-19): Central Bank Balance Sheets: New Rules Being Written
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.
Joan Feldbaum-Vidra, Managing Director, Sovereigns
+1 (646) 731-2362
William Cox, Senior Managing Director & Global Head of Corporate, Financial, and Government Ratings
+1 (646) 731-2472
Business Development Contact
Mauricio Noé, Senior Managing Director and Head of Europe
+44 777 193 6570