Relative to other emerging market (EM) regions, environmental, social and governance (ESG) considerations present larger credit challenges to sovereigns in Sub-Saharan Africa. However, their overall impact on credit quality varies within the region depending on a sovereign's exposure to ESG risks.

Although the overall credit impact of ESG in the region is negative - as measured by our “credit impact scores” - there are wide variations reflecting both different levels of ESG exposure and varying capacities to deal with ESG-related risks.

The pace of mergers and acquisitions among banks across parts of the developing world has quickened in recent years. We expect consolidation to continue over the coming quarters, particularly among the large numbers of small banks. This is because the pandemic has heightened the need to achieve economies of scale by accelerating technological change and by adding to strains from growing digital competition and rising compliance costs.

Demographic changes and weak governance will intensify water stress risks facing some regional and local governments (RLGs), particularly urban RLGs in emerging markets.

Our modelling projects some rise in problem loan ratios throughout 2022; banks in Angola, Mauritius, Nigeria and South Africa are among those which could see the largest increase in asset risk in the region

The capital investment needed by emerging market (EM) sovereigns to meet their climatetransition goals is significant. At the same time, the capacity of EM governments to invest in green initiatives is constrained, especially in the midst of the pandemic when almost all EM governments have seen a significant decline in fiscal revenue and an intensification in their spending pressures.

The government's plan to reduce income and wealth gaps will have profound practical implications, and therefore, far-reaching effects for many types of debt issuers.

Sectors that will be most affected by carbon transition are in many cases adopting their own transition measures independent of the implementation of national-level policies.

Weak growth and social pressures will further weaken public-sector finances. Together with challenging funding conditions and high levels of interconnectedness, liquidity risks are elevated.

Even as Argentina's economy recovers some ground in2022, macroeconomic imbalances and high inflation still pose substantial risk for companies, utilities and regional and local governments.

Decelerating GDP growth, higher interest rates and inflation will slow the positive momentum for Brazilian companies in 2022,but stronger balance sheets will support overall credit quality.

Additional tax receipts of up to 1.8% of GDP per year will only partly address the government's significant challenge of arresting its growing debt burden, which amounts to over 130% of GDP.

Chinese authorities will seek to avoid instability from Evergrande’s resolution to avoid widespread negative repercussions across the economy. However, some costs will likely be borne by the central and regional governments, some financial institutions and other property developers

Prolonged political instability in Afghanistan would result in a large numbers of refugees and potentially increase terrorist activity, raising geopolitical risks in neighbouring countries, particularly Pakistan, Tajikistan and Uzbekistan. This may weaken economic sentiment in those countries and weigh on foreign investment, with long-term implications for economic growth.

Water scarcity will limit hydroelectric power generation capacity, complicating efforts to achieve clean energy targets. Meanwhile, regional and local governments and water-intensive companies, including mining and beverage companies, will face higher capital spending costs as water stress increases over time.

Steelmakers face significant hurdles in reducing carbon emissions. Companies with higher margins, lower leverage and stronger liquidity are better placed to transition to greener technology.

Economic scarring from the coronavirus pandemic will have the most negative credit effects on sovereigns with narrowly focused economies and with limited ability to adapt.

Nigeria, Turkey and Colombia will be hit hardest; China, India and Chile will be most resilient

Provinces with large legacy carbon-emitting industries or exposure to coal mining and weaker fiscal and state-owned enterprise profiles will have most difficulty bearing cost of transition.

Well-targeted safety nets mitigate the severity of economic disruption and reduces social risks, but the availability and quality of these programs vary widely.

The combined EBITDA of the four Russian oil majors we rate will grow by more than 25% in 2021 from a low base in 2020. This will bring leverage closer to pre-pandemic levels by year-end.

Fragmented markets, large populations of unbanked citizens and low e-commerce penetration rates give retailers significant opportunities in Latin America coming years.

Our outlook for the Indian banking system is negative. This outlook expresses our expectation of how bank creditworthiness will evolve in the system over the next 12-18 months.

It is increasingly clear that official-sector lenders are intent on upholding the principle of comparable treatment of official and private creditors under Common Framework debt relief.

Our outlook for the Egyptian banking system is stable. The outlook expresses our expectation of how bank creditworthiness will evolve in this system over the next 12 to 18 months.