Emerging Markets Credit Risk Highlights

Moody’s comparative insights on global emerging markets

Moody's Investors Service

Policy challenges – South Africa: Financial, funding and social challenges elevate contagion risks for South African debt issuers

4 October 2021

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.

Moody's Investors Service

Cross-Sector – Argentina: Companies, utilities, sub-sovereigns struggle with inflation, weak growth in 2022

4 October 2021

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.

Moody's Investors Service

Cross-Sector – Brazil: Strong balance sheets and liquidity support credit quality by 2022 amid macro risks

4 October 2021

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.

China’s actions on Evergrande will likely avoid financial, social instability, but not without economic costs

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

Moody's Investors Service

Developments in Afghanistan threaten to raise geopolitical and economic risks for neighbouring countries

16 August 2021

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.

Moody's Investors Service

Droughts and water stress present growing physical climate risks in Mexico

12 August 2021

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.

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Moody's Investors Service

Steel – Asia-Pacific: Bumpy transition to carbon neutrality signals divergence in credit quality

23 Jul 2021

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.

Moody's Investors Service

Sovereigns – Global Scarring from COVID-19 pandemic will increase fiscal risks and social pressures

22 July 2021

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.

Moody's Investors Service

Banks – Emerging Markets: Asset risk trends will diverge as new waves of virus blight recovery of some markets

20 Jul 2021

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

Moody's Investors Service

Regional & Local Governments – China: Carbon transition will be uneven, with credit risks for provinces in northern China

07 July 2021

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.

Moody's Investors Service

Sovereigns – Emerging Markets: Social safety nets support credit quality by improving response to shocks, reducing social tensions

10 June 2021

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

Moody's Investors Service

Integrated Oil & Gas – Russia: Higher oil prices, weak rouble will fuel oil majors’ 2021 EBITDA and leverage recovery

22 Apr 2021

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.

Moody's Investors Service

Retail & Restaurants – Latin America & Caribbean: E-commerce prospects, regional advantages offer gains especially for biggest operators

08 Apr 2021

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

Moody's Investors Service

Banking System Outlook Update - India: Potential weakening of government ability to provide support drives negative outlook

25 Mar 2021

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.

Moody's Investors Service

Sovereigns – Emerging Markets: Common Framework debt-relief application process reveals rising risks for private-sector creditors

10 June 2021

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.

Moody's Investors Service

Banking System Outlook - Egypt: Stable outlook balances profitability and loan book pressures against sound liquidity and a stable government credit profile

25 Mar 2021

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.