NON-RATING ACTION COMMENTARY
Thu 15 Oct, 2020 – 4:14 AM ET
Please download the full report: What Investors Want to Know: Emerging-Market Sovereigns – 4Q20
Fitch Ratings-London-15 October 2020: Risks facing emerging markets (EM) remain heavily on the downside and further downgrades are likely over 2020 and 2021. However, these downside risks have eased somewhat as, for many EM, the acute shock of the coronavirus crisis appears to have evolved to a more settled, albeit highly stressed, credit environment, Fitch Ratings says in a new report.
Fitch has made a record 35 EM sovereign downgrades in 2020, across 24 different sovereigns. There are 30 EM sovereigns on a Negative Outlook, up from 13 at end-2019, signalling that further downgrades are likely.
Fitch believes the conversion rate of Negative Outlooks to downgrades will be below the long-term average of 63% (for EM and developed markets), as was the case after the global financial crisis. The range of downside risk has eased somewhat since the acute phase of the coronavirus crisis in March-May, when many of the Negative Outlooks were assigned. Rating changes also need to account for sovereigns’ relative changes as well as absolute deteriorations in credit metrics.
The report covers our responses to topical questions from investors on: US-China tensions, Indonesia, the Philippines, Turkey, Romania, Belarus, Mexico, Colombia, the Dominican Republic, currency pegs of Gulf Cooperation Council countries, the rating implications of the Abraham Accords, Angola and how water risks affect sovereign ratings.
The full report, ‘What Investors Want to Know: Emerging-Market Sovereigns – 4Q20’, is available at the above link or at MailScanner has detected a possible fraud attempt from “74n5c4m7.r.eu-west-1.awstrack.me” claiming to be www.fitchratings.com
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