Tuesday, 14 July 2020

Moody's: Emerging market issuers take hit from coronavirus as global recession deepens

Moody's Investors Service sees a challenging year for global emerging market (EM) sovereigns, sub-sovereigns, corporates and financial institutions as a result of the coronavirus pandemic. The 12-month trailing ratio of downgrades to upgrades across EM investment-grade and high yield non-financial corporates increased to 5.9 times in April 2020 from 1.5 times at the end of 2019.

"The global recession is deepening as coronavirus-related restrictions exact a high economic cost, and we now expect real gross domestic product to contract by 1% for G-20 emerging market economies in 2020," Moody's senior credit officer Denis Perevezentsev said.

"We have already seen a large number of downgrades among high-yield corporates in recent months, reflecting the economic and financial upheaval the coronavirus has inflicted upon emerging markets," Perevezentsev added.

Moody's rates 106 emerging market sovereign, a figure that has seen consistent growth from just 63 in 2004, and over 1,600 non-sovereign issuers from 70 EM countries.

Asia Pacific issuers account for 35% of all rated EM non-sovereign issuers, with 60% from China. A total 62% of the region's issuers have investment-grade ratings and 69% have stable outlooks, down from 83% in September 2019. Negative bias is particularly high in India and Vietnam, where respectively 63% and 68% of ratings carried a negative outlook or were under review for downgrade as of 30 April 2020.

Asia Pacific has led growth in EM rated non-financial corporates, and now accounts for 49% of this category, and China for 35%. The region's non-financial corporates have also driven EM Eurobond market activity, accounting for 64% of the $90 billion issued between January and April 2020.

Re-disseminated by The Asian Banker

Diary of Activities
Finance China 2020
28 August 2020 | China
Finance Vietnam 2020
10 September 2020 | Vietnam
MEA International Finance Convention 2020
16 September 2020 | UAE
Wealth & Society Conference - Middle East 2020
16 September 2020 | UAE
Wealth & Society Conference 2020
24 September 2020 | United Kingdom