Recent currency depreciation has been much less pronounced than the declines seen during the taper tantrum in 2013, and the sell-off after the start of the coronavirus pandemic in late 2019. However, if persistent, currency depreciation would present a range of credit pressures

Rising state involvement in private equity market aids the development of public and strategic sectors in China. However, it brings about credit risks to both state and private participants.

We anticipate that emerging markets' growth will buck the global trend and accelerate to 3.8% in 2023, from 3.3% in 2022. However, this will be driven almost entirely by China – most other EMs will still see a reduction in growth. 

Tighter credit conditions will result in both lower financing activity and lower diversity in the financing of Asian emerging market infrastructure in the next 12-18 months, which will have an outsized impact on emerging markets (EM), especially outside of China.

We expect global sukuk issuance to slide further in 2022 after a large decline in 2021, which followed several years of consecutive growth.

In this year's uncertain environment, the likelihood of sporadic risk-off episodes pushing capital flows from EMs to safe havens is high.

The deal will aid government efforts to turn around the economy, which lacks the foreign exchange resources to import essential items such as fuel, fertilisers and food, or to address social challenges.

The disbursements will help offset the government's outlays for its post-pandemic countercyclical development expenditure program (CDEP) that aids vulnerable sectors of the society, support longer-term economic reforms and ease pressure on its balance of payments position. 

The IMF financing and the additional support from bilateral partners that it will catalyse will ease pressure on Pakistan's dwindling foreign exchange reserves, which currently cover less than two months of imports.

Some sovereigns have overcome constraints related to low incomes through institutional, social and economic reforms which have bolstered their credit strength.

While higher-rated EMs are resilient, some lower-rated frontier markets are facing rising liquidity risks due to challenging market conditions, raising debt sustainability risks.

The president's announced intention to buy back two bonds maturing in 2023 and 2025 at market prices, below par, would likely constitute a distressed exchange.

Currency pegs and fuel price caps will keep GCC inflation below levels reported elsewhere, while robust oil revenues will allow governments to sustain fuel subsidies and contain social risks

Food security has become a major concern for governments in Asia-Pacific as the Russia Ukraine military conflict continues to disrupt the supply and raise the cost of agricultural products.

Forced currency re-denomination is not permitted under the bond’s indenture and results in a diminished financial obligation.

An upcoming maturity wall and a deterioration in global financial conditions triggered by the Russia-Ukraine conflict will intensify rollover risks for many African sovereigns over the next decade.

Policy rate hikes to curb inflation typically lead to improvements in banks' margins. Yet a more rapid acceleration of inflation would negatively impact asset quality, erasing margin gains.

The Russian invasion has severely disrupted the economy and public finances. International support is forthcoming but debt will likely prove unsustainable, raising risks of a restructuring.

While the new measures will accelerate deficit reduction, the additional tax burden will intensify policy uncertainty for investors and businesses and further weaken bank profitability, a credit negative.

In our downside scenario about 30% of the emerging market companies we rate are at risk of credit quality erosion through commodity price shocks and financial and economic disruption.

We expect the greatest risks for sovereigns with weaker macroeconomic frameworks, particularly where cryptocurrencies can be used to evade capital controls, weakening policy effectiveness.

Some emerging market banks are better placed to deal with the latest crisis than others.

While the credit impact of the pandemic on emerging market sovereign credit was uniformly negative, this shock will result in a range of outcomes which hinder, but do not derail, the trajectory of the recovery from the pandemic

In this report, we summarize key risks for the sovereign credit profiles of some emerging markets (EM) based on meetings with investors in Washington DC on the sidelines of the IMF-World Bank spring meetings.

South Africa's government has faced major challenges over the past couple of years to balance support for its economy, especially during the coronavirus pandemic, with fiscal sustainability.

In April, a delegation of Moody’s analysts attended the IMF Spring Meetings in Washington DC and met with sovereign issuers from across the globe, as well as public and private-sector market participants. In this report are some of the key takeaways from those meetings.

Healthy capital positions and access to liquidity mitigate the deterioration in asset quality and performance we expect post pandemic.

The stability of key funding sources and credit stimulus limit the impact of key transmission channels from the conflict. Lira stability will be key to contain any further rise in inflation.

Crowding-in private-sector investment will be crucial for emerging markets to meet their Sustainable Development Goals. Risk mitigation strategies are positive but the market seeks scale.

The ripple effects of the Russia-Ukraine conflict are spreading globally at a time when most sovereigns are still dealing with economic and fiscal scarring from the pandemic. The most exposed sovereigns are Poland, the Baltics and Moldova given their political risk exposure, as well as Commonwealth of Independent State sovereigns that face significantly lower growth and higher external vulnerability.

Emerging markets are increasingly considering implementing central bank digital currencies (CBDCs) as an alternative to cryptocurrencies and crypto assets, which are volatile and can threaten financial stability. However, even if still-nascent implementation efforts accelerate over the next year, it will take years before CBDCs become a key feature of the global financial architecture.

The sharp deterioration in Russia's economy represents an acute shock for the region's external vulnerability risk, growth outlook and prospects for fiscal consolidation.

While still far from wide adoption, particularly given limitations to technical infrastructure worldwide, a credible, widely accessible and reliable CBDC could support economic growth.

China’s ambitious growth target amid rising economic stress and external uncertainty to push up leverage, debt ratio; credit impact relies on growth outturn, effectiveness of implementation.

The disruption of food supplies from Russia and Ukraine is likely to further compound inflationary pressures in global food prices.

The invasion of Ukraine has led to a steady deterioration in the ability and willingness of all three governments to repay debt, and will have long-term economic and fiscal consequences.

Sharply higher risk premia indicate that external market access on affordable terms is effectively interrupted and, if persistent, would increase liquidity risks.

Economic and fiscal metrics recovered and leverage increased, with outstanding RLG bonds exceeding RMB30 trillion for the first time.

Rating actions in 2021 through 24 February 2022 were more balanced between negative and positive actions compared to 2020, although the pandemic continued to place downward pressure on non-investment-grade sovereign ratings.

Ban on servicing new foreign-currency debt undermines institutional strength, a credit negative

The risk that heightened tensions may culminate in a further military conflict have risen. We answer questions regarding the credit implications in a scenario in which tensions escalate.

Should the Bitcoin bond issuance fail, El Salvador would have to rely solely on multilateral financing and unconventional policy measures to raise funds to repay the 2023 bond.

Dollarization is highest for banks in Latin America, emerging Europe and CIS.

Program targets under the potential new agreement with the IMF will likely fail and the program itself is unlikely to reverse the sovereign's debt restructuring needs.

Quality of institutions and the capacity to adjust will determine the credit impact of carbon transition for hydrocarbon-reliant sovereigns.

Regional and local governments (RLGs) in South Africa, India, Russia and Mexico are likely to accelerate their capital expenditure (capex) after cuts triggered by the pandemic. However, infrastructure gaps have widened and progress will likely remain stalled absent greater external support

In the majority of emerging markets, banks will continue to benefit from the expansion of working-age populations. Yet the demographics of those countries pose their own risks for banks.

Pent-up demand for tourism offers good prospects for Latin America and the Caribbean's travel-related sectors in 2022 and beyond. Despite a lingering uneven recovery and the unknown implications of the Omicron variant, rekindled demand fortravel to the broader region will persist through 2022, with infection rates in the region declining through November 2021 and vaccinations accelerating in large markets.

FDI inflows into emerging markets have fallen amid declining returns and weaker growth. With structural headwinds likely to prevent a reversal of this trend, growth potential may be weakened.

Environmental damage to Brazil's biomes will have a substantial impact on Brazilian companies in coming years, rippling across different sectors and the wider economy.

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.