Emerging Markets Credit Risk Highlights

A selection of Moody’s latest comparative insights on global emerging market research. For a complete list of EM reports on Moodys.com click here.

Sovereigns – Global: State-contingent debt instruments can aid debt restructuring, but can carry fiscal risks

30 Jan 2024

SCDI can speed up debt restructuring but pose risks if not closely aligned to a sovereign's debt-carrying capacity.

Geopolitical risk – Middle East: Attack on US troops increases escalation risk, but credit implications limited thus far

01 Feb 2024

Provided other sovereign states are not drawn into a wider conflict in the Middle East and the economic costs of disruptions to shipping routes are contained, the credit effects are limited.


Construction – China: Revenue growth of rated companies will slow amid softening economic prospects

29 Jan 2024

Property market stress and moderated infrastructure investment will constrain domestic new order growth. While overseas new orders will rise, the contribution to total revenue will remain small.

Banks – Vietnam: Stricter ownership limits and single-borrower exposure rules are credit positive

26 Jan 2024

New rules on tighter bank ownership and single borrower's credit limit will boost Vietnamese banks' credit profile by enhancing transparency and reducing governance and asset quality risks.

Emerging Markets – Global: 2024 EM bond issuance off to strong start as investor sentiment improves

16 Jan 2024

EM sovereigns, financial institutions, and companies, including high-yield ones, issued $53.5 billion of bonds during the first two weeks of January, a historically high level.


Digital transformation - China: AI push to partly offset growth challenges but geopolitics, regulations may curtail benefits

23 Nov 2023

Efforts by the government of China to foster the development of artificial intelligence (AI) will likely partly offset economic pressures from declining growth in productivity and shrinking labor force. However, the impact of geopolitics, concerns about social stability, and elements of regulatory design may curtail the full economic benefits that AI innovation offers.

Sovereigns – Middle East and North Africa: Water-related risks broadly constrain credit strength, but exposure and mitigants vary

22 Nov 2023

All Middle East and North Africa sovereigns face significant water-related challenges, which will be compounded by the effects of climate change. This exposure curbs credit strength by limiting economic growth potential and eroding fiscal resources. If left unaddressed, it could also aggravate social and cross-border tensions, increasing political risk.

Inside ASEAN: 32nd Edition

21 Nov 2023

Moody’s quarterly review of credit developments across Southeast Asia.


Cross Sector – China: Slowing growth intensifies spillover effects of long property market downturn

14 Nov 2023

China's property downturn has worsened in 2023 as the country's tepid economic recovery from the pandemic has weakened consumer and investor sentiment, and credit stress at some large private developers has amplified risk aversion.

Sovereigns – South Asia: Low trade openness fuels vulnerability to shocks and curbs growth in the longer run

9 Nov 2023

South Asia's rated sovereigns – Bangladesh, India stable, Pakistan, and Sri Lanka – have very low exports as a share of GDP, attract little foreign direct investment, and are not well integrated in global value chains. South Asia is operating at only one-third of its export potential, according to the World Bank, reflecting a largely inward-looking development strategy.

Emerging Markets – Global: Federal Reserve on hold for longer implies slower pivot to policy easing for some EMs

30 Oct 2023

Uncertainty over the Fed's timeline for interest rate cuts, the strong US dollar, and continued high inflation are likely to slow the pace of interest rate cuts in a number of emerging markets.


Macroeconomics - Global: China's slowdown will hurt key trading partners; global fallout is limited

26 Oct 2023

China is not a significant source of demand for most advanced economies, but we are monitoring trade, supply chains, commodity prices, and financial flows for spillovers to emerging markets.

Banks - Egypt: Macro profile - Very Weak

13 Oct 2023

Egypt's "Very Weak" macro profile reflects a deteriorating trend in debt affordability and persistent foreign-currency shortages in the face of increasing external debt service payments over the next two years.


Credit Conditions – Emerging Markets: New EM Credit Compass suggests credit conditions will remain weak in Q4

10 Oct 2023

The new EM Credit Compass indicates credit conditions will remain below historical norms. This inaugural compass signals that EM credit conditions have been hovering in the weak category for the last three years and will remain there through year-end, after sinking into the stressed category during the pandemic

Emerging Markets Insight

05 Oct 2023

This edition recaps recent EM research on a range of topics including the impact of tight financing conditions, China's ageing population, and an appendix of ratios for the 104 EM sovereigns we rate.


Credit Conditions – Latin America & Caribbean: Slow growth, tepid commodity prices stifle corporate credit-quality gains through 2024

25 Sep 2023

Slowing economic momentum, still-high inflation, and high-interest rates all imply stress for Latin American corporate and infrastructure credit quality through 2024.

Cross-sector – China: Shadow Banking Monitor – China: September 2023

21 Sep 2023

Credit recovery remains patchy despite signs that supportive policies are gaining traction. Credit growth in August was mixed, but there were early signs of recovery, suggesting monetary and fiscal stimulus are starting to gain traction.


Banks – Asia-Pacific: Ongoing real estate sector stress raises credit risks for banks in China and Vietnam

20 Sep 2023

As risks mounted, the global real estate outlook was changed to negative from stable in June 2023. While the property market in many Asia-Pacific markets has been resilient, China and Vietnam faced challenges.

ESG – Global: Responsible production risks curb benefits of supply-chain diversification for apparel

14 Sep 2023

Apparel companies globally have implemented "China plus one" strategies by diversifying their supply chains into other emerging economies. This strategy is credit-positive overall as it reduces vulnerability related to heavy reliance on China and exposure to rising labor costs.

Asia-Pacific: High-yield nonfinancial companies

14 Sep 2023

APAC nonfinancial companies’ high-yield default rate is forecast at 4.9% for 2023, in line with the 10-year average trend. The rate reflects the worsening operating and credit conditions for APAC companies because of slowing global economic growth, an uneven rebound of China's economy, and continued tight monetary policy and high-interest rates.

Property – China: Outlook changed to negative; economic challenges offset policy support for sales

14 Sep 2023

We revise our outlook for China's property sector to negative from stable. Weaker economic growth prospects and concerns over on-time project completion and delivery will continue to weigh on homebuyers' confidence and demand for the next 6-12 months. The credit stress at Country Garden Holdings Company Limited has also amplified homebuyer risk aversion.

Financial Institutions – Latin America: Rising consumer loan risks draw attention despite falling rates and inflation

12 Sep 2023

In the last five years, household indebtedness as a percentage of GDP has increased in Brazil, Mexico, Chile, Colombia, and Peru by an average of 156 basis points. Financial systems' heightened exposure to consumer loans makes their performance more susceptible to the harmful effects of inflation and of higher-rates-for-longer, or to a more pronounced economic slowdown that could raise unemployment and suppress wage growth.

Financial Stability – APAC: Financial systems remain bank-dominated, but NBFIs could still pose risks

07 Sep 2023

Our global research report on non-bank financial institutions established that risk crystallization in the sector would have a varied credit impact on different categories of debt issuers. This companion APAC report focuses on the region's NBFI sector and zooms in on five individual markets — Australia, Korea, India, Japan, and China, which stand out for their significance in respective domestic financial systems.

Macroeconomics – Emerging Markets: Resilient growth but commodity volatility risks return of high inflation

5 Sep 2023

Our baseline expectation in our third-quarter economic update is that emerging markets' growth will continue to hold up relatively well in the next 12-18 months, despite the difficult global economic environment. However, volatile commodity prices could derail slowing inflation and make it more difficult for EM central banks to ease monetary policy.


Property – China: Mortgage loan policies signal significant shift in government support to developers

04 Sep 2023

The policies signify a significant shift in government efforts to boost property demand, suggesting that authorities see an urgent need to stabilize the property market to boost economic growth.


Sovereigns – South and Southeast Asia: Population growth alone will not drive credit benefits for emerging economies

28 Aug 2023

We expect continued population growth in South and Southeast Asia to support economic expansion as working-age populations will remain large compared with younger and older citizens. However, the availability and scale of labor inputs alone will not drive materially stronger economic strength or better fiscal outcomes.


Infographic: Air-conditioning sector has long demand runway in emerging markets

24 Aug 2023

Extreme heat, low market penetration in large populations and growing economies, particularly in emerging Asia, will spur demand for products.


Asia’s demographic shifts are driving diverging credit risks

23 Aug 2023

Young, growing and increasingly wealthy populations have supported Asia’s economic expansion. But parts ofthe region are now aging rapidly – in some cases at relatively low income levels.


Macroeconomics – China: Medium-term growth outlook will reflect effectiveness of economic rebalancing

21 Aug 2023

Structural challenges like an aging population, slowing productivity growth, and reduced capital efficiency will dampen China's economic growth in the next 3-7 years.


Housing – Asia-Pacific: Housing affordability will improve but remain a strain for homebuyers and builders

17 Aug 2023

Housing affordability will improve in Asia-Pacific this year because GDP per capita will outpace home prices, though it will remain a stretch in some countries amid elevated interest rates.

Demographics – China: Aging population, smaller workforce will have broad implications across sectors

17 Aug 2023

Demographic dividends that drove productivity and rapid growth in China over the past decades are dissipating as the population ages. The declining labor contribution to growth will be a key drag on China's economic potential over the long term, particularly as benefits from urbanization fade.


Coal Mining – Asia-Pacific: Strengthened credit quality means rated companies can withstand price downturn

17 Aug 2023

The combination of stronger liquidity and lower debt than in the past means miners' will maintain stable operations and continue with new investments despite a decline in coal prices.


Metals & Mining – Cross Region: Price sensitivity ranges lowered amid soft demand growth; raised for precious metals

16 Aug 2023

We have reduced our 12-month price assumptions for certain metals and mining commodities—aluminum, zinc, iron, coal and Brazilian steel—to reflect demand growth easing amid a global economic slowdown, inflation and tight financial policies, all of which restrain manufacturing and construction activities in certain regions.


Real Estate – Indonesia and Vietnam: Refinancing risk brews even as income growth supports long-term housing demand

16 Aug 2023

Near-term headwinds persist and refinancing risk is high but the housing growth story over the next decade remains intact.


Regional and Local Governments – China: Structurally lower land sales test capacity to support, raising LGFV default risk

08 Aug 2023

Regional and local governments in China face increasing obstacles in providing support for RLG-controlled state-owned enterprises, including local government financing vehicles. As a result, LGFV bond default risk is rising in our view, particularly in regions with weakening capacity to support and where funding access has become more strained.

Property – China: Strong demand and government policies will drive expansion of rental housing

03 Aug 2023

Demand for residential property leasing will keep growing, particularly in tier-1 and tier-2 cities within regions that have more robust economies and attract population flows.


Regional and Local Governments – China: Shrinking working-age population will test fiscal management

01 Aug 2023

China's demographics are placing pressure on RLG budgets and intensifying competition for labor, hitting hardest the less economically dynamic and more indebted regions.


Nonfinancial Companies – China: Higher likelihood of government support for LGFVs than property sector

27 Jul 2023

LGFVs have a central role in providing key public services in different regions. Widespread defaults at LGFVs will lead to higher reputational, social and economic instability risks.

Banks – Asia-Pacific: Risks from exposures to real estate companies are moderate

26 Jul 2023

In this report, we examine financial institutions' exposures to real estate companies in 11 systems across Asia-Pacific. Rises in interest rates globally are weighing on the sector, potentially raising credit risks of this borrower group, while in China, which maintains accommodative monetary policy, privately owned developers remain under stress due to sluggish sales and a tightening of funding sources. Risks from such exposures are relatively high for banks and nonbank financial institutions in some systems but there are mitigating factors. Risks are limited in the other parts of the region.

Sovereigns – Asia: Aging in key economies will drag on growth and finances, with global credit implications

26 Jul 2023

Over the next two decades, six Asian economies – China, Hong Kong SAR, China, Japan, Korea, Singapore and Taiwan, China – will experience rapid increases in their populations aged 65 and above, and large declines in those of working age. The drag on growth and public finances for these economies will be significant, barring gains in productivity, workforce participation or quality of available labor. Given the role of several of these economies in driving international savings, Asia's demographics will also have global implications for interest rates and inflation.


Geopolitics – China: Drive toward self-sufficiency in high-tech manufacturing faces some major hurdles

19 Jul 2023

Restrictions on critical know-how and investment, the size of China’s technology gap with competitors and deficiencies of a state-run model will at best delay and worst limit gains.


Credit Conditions – China: Soft economic recovery heightens contingent liabilities from LGFV debt risks

17 Jul 2023

While we continue to believe that the probability of a financial crisis remains low, credit risks are increasing across a range of sectors.

Financial Institutions – Chile and Colombia: Proposed pension rules would hurt private incumbents and banks' long-term funding

17 Jul 2023

Changes under discussion for pension funds in Chile and Colombia will reduce the scope and earnings capacity of private pension managers and upend long-term funding dynamics.

Financial Institutions – Chile: Niche lenders struggle with inflation, high rates and consumption slowdown

11 Jul 2023

Three vastly different Chilean consumer lenders are facing increased asset risks and funding costs amid the country's economic contraction and still-high inflation.


Water Utilities – China: Rapid growth driven by urbanization and policy directives

10 Jul 2023

An overview of China's water utilities sector, including leading companies, industry and trends, demand and supply drivers, environmental and social considerations, and government policies.


Regional and Local Governments – China: China's National Audit Office reveals many local governments inflated revenue and hid debt

03 Jul 2023

National Audit Office report reveals many Chinese local governments inflated revenue and hid debt in 2022, pointing to mounting fiscal pressures.

Property – China: China Property Focus: Developers' defaults will decline on stabilizing market conditions

29 Jun 2023

We expect the growth rate for national contracted sales value to slow further in the coming months. Developers' default will decline in the next 12 months from the peak in 2022.

Macroeconomics – US and China: US economy will withstand China’s slowdown, geopolitical tensions pose risk

29 Jun 2023

China's gross domestic product (GDP) growth over the next three to seven years is unlikely to bounce back to past highs, as a mix of demographic, productivity, policy, and sector-specific trends weighs it down. Over the next several years, even as China's economic growth remains slower than in the previous decade, effects on the overall US economy will be limited. By contrast, geopolitical-related policies will pose risks to some of the US economy.


Emerging Markets Insight: June 2023

23 Jun 2023

This edition recaps recent EM research on a range of topics including the impact of tight financing conditions, China's reopening and an appendix of ratios for the 104 EM sovereigns we rate.


Load shedding will continue as the system remains under severe pressure

21 Jun 2023

South Africa is in the midst of the worst energy crisis in decades as rolling blackouts occur daily. The electricity system will remain under extreme pressure this year despite Eskom Holdings SOC Limited 's efforts to improve plant availability. Growth in new capacity will ease system pressure, but progress in development of new build-out will take time and will require investment in network infrastructure.


Emerging Markets – Global: As inflation and growth slows across most major EMs, APAC stands out as potential bright spot

15 June 2023

The weak global economic environment will weigh on export-oriented emerging market economies, manifesting in lower growth while inflation continues to moderate in most economies.

Sovereigns – Global: Frontier markets' debt sustainability at stake; political economy drives debt paths for some

14 June 2023

A combination of increasingly large interest payments and debt burdens has already hit several frontier market sovereigns, with a quarter having either already defaulted or come closer to it.

Infographic: Most sovereigns we rate could withstand wider financial stress

5 June 2023

Rapidly rising interest rates have triggered latent risks at financial institutions in recent months. Policy action would likely prevent problems from spiraling if they were to emerge, but contagion to the wider economy remains a key risk. Most sovereign ratings would be resilient to such a scenario. Around a quarter may not be.


Emerging Markets – Global: Credit conditions remain weak but rate of EM sovereign downgrades slows

25 May 2023

Scrutiny of the global banking sector and US debt ceiling negotiations add to existing policy uncertainty; spillovers to EMs will be largely via the impact on global financial conditions.


Emerging Markets – India: Growing industrial sector will drive economy, but may face investment hurdles

23 May 2023

India is now the world's most populous country and the fifth-largest economy globally, with its GDP passing $3.5 trillion in 2022. India will be the fastest-growing G-20 economy over the next few years, with its growing manufacturing and infrastructure sectors. But reform and policy barriers could hamper investment.


Project Finance - GCC: Contractual risk transfer drives credit strength of critical infra minority financings

23 May 2023

Project financings of minority stakes in infrastructure assets sold by GCC SOEs raise unique credit considerations due to the issuer's lack of ownership and control of the physical assets.

Sovereign & Supranational – Commonwealth of Independent States: Weakening but determined Russia is disrupting geopolitical dynamics in the CIS

18 May 2023

Russia's political isolation, military weakening and economic decline undermine its role as CIS security guarantor, increasing geopolitical risk in the region.

Financial Stability – Latin America & Caribbean: Corporate and infrastructure liquidity risk has increased amid tepid overall growth

16 May 2023

Liquidity for companies in Latin America's biggest economies worsened slightly overall in 2022, with liquidity risk remaining fairly high in Argentina while picking up in Brazil and Peru.

Banks – Emerging Markets: Emerging markets banks' liquidity is largely resilient to heightened volatility risks

16 May 2023

Many banks have staved off the latest round of heightened volatility with conservative buffers, granular bases and sticky deposits, but foreign-exchange vulnerabilities could pose a threat.

Sovereigns – Emerging Markets: Changing creditor landscape amplifies frontier markets' exposure to liquidity risk

11 May 2023

The combination of limited international market access and net negative external financing from China are amplifying challenges due to upcoming external amortizations for frontier markets.

ESG – Latin America: Ongoing social and political discontent amplify credit risks throughout region

8 May 2023

Intensifying socio-political risks imply hazards for Latin American credit quality in terms of governability; regulatory changes and government intervention; and economic performance.

Sovereigns – Global: Materialization of unrest as social contracts fray has measurable credit impact

2 May 2023

Social unrest events erode credit quality through weaker economic activity and fiscal performance, and increased event risk, particularly for lower-rated sovereigns.

Banks – Emerging Markets: Governance and external support mitigate environmental and social risks

2 May 2023

Good risk management and solid credit metrics, likelihood of extraordinary support if needed and other factors mitigate the effect of ESG considerations on most banks' credit strength.


Macroeconomics – Asia-Pacific: China's reopening will support growth in region, aiding recovery in some sectors

27 April 2023

China's expanded demand will modestly support growth in APAC. Economies with large direct trade and investment exposure to China, and the consumer goods and tourism sectors will benefit the most.

Nonfinancial Companies – South and Southeast Asia: Real estate is most exposed to high interest rates; commodity sectors the least

27 April 2023

In our stress test of rated companies' exposure to a higher cost of debt, real estate companies came out weakly positioned, reflecting a lower interest cover base and higher debt burden.

Sovereigns – Global: Fallen angel sovereigns' path back to investment grade is challenging, paved with reforms

25 April 2023

Since 1995, 28 countries that we currently ratehave become fallen angels, downgraded from investment grade (IG) to speculative grade. These include advanced, emerging and frontier market sovereigns spanning all geographic regions. Those that have reverted back to IG have undertaken deep and broad policy reforms.

Emerging Markets – Latin America & Caribbean: Unsettled macro risks greater for consumer sectors than for exporters, utilities or banks

20 April 2023

Latin American companies will struggle to refinance amid tight liquidity and high funding costs, but those with strong credit quality and liquidity will withstand the difficult conditions

Financial Stability – Global: Frontier market sovereigns most vulnerable to risk of tighter-for-longer funding conditions

18 April 2023

Frontier markets' access to funding is more sensitive to investor confidence and they are less able to reduce their borrowing requirements.

Banks – Asia-Pacific: China's reopening will benefit only a few banking systems in Asia-Pacific

18 April 2023

China's economic growth will accelerate to 5.0% in 2023 from 3.0% in 2022, driven by a rebound in consumption after the country ended strict policies to curb coronavirus infections. China's reopening will be a boon to the economies, and hence the banking systems, of Hong Kong SAR, China; Macao SAR, China; Mongolia; and Thailand, given their close economic ties to China through shared borders or tourism.

Emerging Markets – Corporates: EM corporate credit quality better placed to handle next downturn

17 April 2023

The global economy has faced no shortage of challenges in recent years. Now, a new set of headwinds has emerged, with banking stresses flaring up in the US and Europe. The economic backdrop has shifted in recent weeks with near-term financial stability concerns posing downside risks to the global growth outlook. 


Financial Institutions – Brazil: In Brazil’s digital finance transformation, CBDC is latest chapter; crypto risks low

17 April 2023

Brazil's central bank digital currency is the next step in its digital finance transformation. Plans for Brazil to launch a CBDC could boost liquidity, lower costs for a variety of assets and shift the role its banks play in a changing financial landscape.

Corporates - Emerging Markets: EM corporate defaults will decline from 2022 peak, but remain above average

12 April 2023

The speculative-grade default rate for rated nonfinancial corporate issuers in emerging markets (EMs) climbed to 15.1% for the trailing 12 months ended in December 2022, up from 6.7% a year earlier and much higher than the comparable rate in advanced markets. 


Emerging Markets - Global: Recurrent food insecurity shocks will worsen macroeconomic weakness and social risks

11 April 2023

Rising global demand for food, exposure to geopolitical disruption and physical climate risks will keep global food security fragile and vulnerable to shocks.

Government of Brazil - Brazil's new fiscal framework supports its credit profile, but implementation risks are high

05 April 2023

On 30 March, Brazil (Ba2 stable) Finance Minister Fernando Haddad proposed a new fiscal framework to limit Brazil's fiscal deficit. The framework would limit real growth in primary spending to 0.6%-2.5% per year and cap a spending increase at 70% of revenue growth in the prior 12 months. 

Internet: China - Companies will continue to reduce costs and investments as growth slows

04 April 2023

Chinese internet platform companies will continue to focus on cost efficiency and controlling investment spending in the next 12-18 months, amid still-slowing revenue growth. 

Leveraged finance - Brazil: Recent defaults heighten risk aversion and limit capital market access for issuers

30 March 2023

The default of retailer Americanas and several debt restructurings by other Brazilian companies contribute to a tough credit environment in the country, which has high interest rates, political uncertainties, and more restricted access to the cross-border capital market.

Banks – G20 Emerging Markets: Contagion effects from US bank distress will be modest

17 March 2023

The credit-negative events surrounding US-based lenders Silicon Valley Bank, Silvergate Bank (Caa1/Ca, caa3 review for downgrade) and Signature Bank in the past week have refocused investors' attention to the health of banks around the world, including in the largest emerging markets (EMs). 


Emerging Markets – Global: EM financial conditions will remain tight amid recent US financial market volatility

16 March 2023

In light of the recent bank failures in the US (Aaa stable), the outlook for emerging market financing conditions has once again come under the microscope. Volatility in US treasury bond yields has increased sharply in the last few days, particularly for shorter-dated maturities. 

Banks – Latin America: Contagion effect of US bank closures will be limited for LatAm banks

15 March 2023

Since the 10 March failure of US-based Silicon Valley Bank and closures of Silvergate Bank (Caa1/Ca, caa3 review for downgrade) and Signature Bank (C, c stable), the challenges in the global operating environment for banks have come into focus. Latin America's financial institutions have limited direct exposure to the three banks, as well as to fintechs and cryptoasset companies, both through deposits or loans.

Financial Institutions – Asia-Pacific: Structural factors will limit impact of US bank failures

14 March 2023

On March 12, 2023, US regulators closed Signature Bank, just two days after shutting Silicon Valley Bank, following mass withdrawals of customer deposits from these regional banks. These events are likely to result in a tightening of liquidity in debt markets globally as investors grow wary.


Macroeconomics – Emerging Markets: G-20 emerging market economies are slowing, but underlying momentum differs

13 March 2023

Fourth-quarter 2022 (4Q22) headline GDP data indicate that growth slowed in several G-20 emerging markets (EMs), although underlying growth momentum differs significantly from country to country.

Cross-Sector – Islamic Finance: Islamic finance sector will remain resilient despite tight global financial conditions

07 March 2023

We expect demand for Shariah-compliant instruments to continue to rise in 2023, supported by strong economic growth amid robust oil prices and ambitious development agendas in core Islamic markets.

Financial Institutions – Africa: ESG risks are material, but credit impact is muted by government support,

07 March 2023

African banks are more exposed to governance and environmental risks than their global peers. Relative governance weaknesses have led to operational and loan losses, while risk exposure to climate change and carbon transition is intense.


Credit Conditions – China: Reopening to boost transport, consumer-facing sectors; banking sector strains linger

02 March 2023

The exit from zero-tolerance coronavirus restrictions in December 2022 and shift in government focus to growth prompted us to raise our forecast for inflation-adjusted real GDP growth in 2023 and 2024. 

Banking – Southeast Asia: Banks well places against fintech disruptors after successful digital transformation

02 March 2023

Banks in Southeast Asia have made significant progress on their digital transformation journey, and incumbents that are willing to invest in technology are well placed to compete with fintech’s.

Government Policy – China: FAQ on credit implications of latest policy support for the property sector

01 March 2023

The measures broaden developers' funding access, which will help many better address near-term operating and debt repayment needs.

Banks – Commonwealth of Independent States: Ukraine invasion provides gains for some CIS banks but long-term challenges mount

28 February 2023

Ukraine invasion provides gains for some CIS banks. While banks in Ukraine and Belarus suffered from the Russian invasion of Ukraine last year, banks in other parts of the Commonwealth of Independent States (CIS) reaped some unexpected gains.


Macroeconomics – Emerging Markets: Policy rates in Brazil and Mexico near peaks as inflationary pressures recede

27 February 2023

We expect both Brazil and Mexico’s central banks to remain vigilant about inflation resurgence risks, as well as shifts in US policy direction. Brazil started hiking rates early in 2021 and Mexico followed suit, but from a higher starting point.


Emerging Markets – Global: Tight financing conditions will continue challenging frontier markets’ credit strength

22 February 2023

Recent improvement in financing conditions is positive for many emerging market (EM) issuers, with inflation, yields and spreads all somewhat lower since November 2022. Nevertheless, hopes for rate cuts in the US in the near term are likely misplaced, while China's rebound will not provide the same broad-based benefits as in previous cycles. 

Sovereigns – Emerging markets: Protracted debt restructurings are credit negative for borrowers and lenders

22 February 2023

Drawn-out negotiations to restructure government debt in Zambia, Ethiopia and Suriname highlight the inherent difficulties in reaching an agreement among a diverse creditor base, a risk we flagged two years ago.

Banks – Emerging Markets: Incumbent banks evolve to head off new entrants

22 February 2023

Large incumbent banks across emerging markets (EMs) are making substantial operational changes to contend with new digital market entrants that are fundamentally altering the dynamics of product development, marketing, customer retention and growth.

Social Risks – Peru: Social unrest has mixed credit effects across sectors: severity will depend on duration

16 February 2023

Social unrest has mixed credit effects for companies, mostly affecting mining, agriculture and transportations sectors.  Companies among different sectors have had limited short-term credit implications from Peru's current sociopolitical environment, but persistent unrest would imply greater damage to the companies' credit metrics.


Emerging markets – Turkiye: Most rated Turkish issuers are resilient to impact of earthquakes

14 February 2023

Most rated issuers are resilient to impact of earthquakes. Economic impact is likely to be moderate; governments strong fiscal position mitigates elevated cost of relief and reconstruction.


Banks – Brazil: Surge in household debt burden will prolong asset risk pressures beyond 2023

07 February 2023

Banks’ asset risk pressures to persist beyond 2023. Brazilian households' disposable income is showing the strains of elevated living and debt-service costs and driving up retail banks' loan-delinquency ratios.


Credit Conditions – Asia-Pacific: China’s growth, tighter funding and geopolitics will define 2023 conditions

01 February 2023

Strong, though moderating, economic growth rates in Asia-Pacific (APAC) will support the region's credit conditions in 2023. However, APAC's growth trajectory will partly hinge on the recovery in China (A1 stable). Peaking inflation globally will provide space for monetary tightening cycles to slow, but financial conditions will remain challenging for the weakest-rated issuers.


Geopolitical Risks – Asia-Pacific: Asian-Pacific regional fault lines will increasingly expose cracks in trade and financial relationships

18 January 2023

Rising geopolitical tensions in Asia-Pacific (APAC) against the backdrop of increased competition between China and the US and its allies in the region will create "fault lines" that could carry long-lasting credit effects.

Sovereigns – Asia-Pacific: 2023 outlook stable on debt sustainability but social risks will curb fiscal consolidation

09 January 2023

Our outlook for sovereign creditworthiness in Asia-Pacific (APAC) for 2023 is stable overall, contrasting with our negative outlook for sovereigns globally. Debt sustainability and financial stability are relatively well anchored in the region, with contained government liquidity risks, broadly stable debt dynamics and generally sound external positions.

Regional and Local Governments – China: 2023 outlook negative as debt, contingent liabilities build, land sales remain weak

09 January 2023

Our outlook for credit conditions for Chinese regional and local governments (RLGs) in 2023 is negative, given our expectation of ongoing weakness in land sales revenue, persistently high fiscal deficits, and continued growth in direct debt and contingent liabilities.

Banks – Emerging markets: Foreign-currency risk is acute for some banking systems

05 December 2022

FX risk is acute for some EM banking systems. A material exposure to currency fluctuation could expose emerging markets (EM) banks in these countries to additional risks to asset quality, liquidity and capital.


A prolonged slowdown in China will reverberate through Asia-Pacific and beyond

2 November 2022

Economies with significant direct trade exposure to China would incur the biggest negative effects, with slower growth in China likely to depress confidence and investment in the region.

Government of South Africa: Medium-term budget's stronger revenue projections and improved fiscal forecasts point to lower debt trajectory

28 October 2022

The Medium Term Budget Policy Statement announced better-than-expected revenue outcomes, which translate to improved fiscal deficits and lower-than-expected debt levels in the coming years, a credit positive.

Government of Egypt: IMF staff level agreement enhances Egypt's funding prospects

28 October 2022

On 27 October, the International Monetary Fund (IMF) reached a Staff-Level Agreement on a 46-month, $3 billion Extended Fund Facility Arrangement (EFF) with the government of Egypt. The EFF, which we expect will be finalized before year end, is credit positive because it is expected to unlock additional funding from multilateral and regional partners.

Cross-Sector – Emerging Markets: EM corporates face high refinancing risk as tight financial conditions persist

25 October 2022

Tight financial conditions, high credit spreads and outflows from EMs will make it difficult for many lower-rated issuers to refinance maturing international bonds.


Government Policy – Brazil: FAQ on presidential election's credit implications for issuers in different sectors

13 October 2022

Our baseline scenario does not incorporate major post-election disruptions for Brazil, but any persistent uncertainty over policy direction will hinder the country's economic and financial prospects.

Carbon Transition – Southeast Asia: Commodity reliance challenges transition, while regional cooperation supports green finance potential

3 October 2022

The countries of the Association of Southeast Asian Nations (ASEAN) have varied approaches toward reducing carbon emissions but face a number of common challenges such as heightened exposure to physical climate risk and carbon transition costs from their fossil fuel dependence and reliance on energy-intensive manufacturing. 

Government of El Salvador: Debt buyback amounts to a distressed exchange, second buyback planned

28 September 2022

On 22 September, El Salvador (Caa3 negative) finalized its debt buyback operation of two bonds maturing in 2023 and 2025 for $360 million, which we consider a distressed exchange and hence a default under our definition .

Sovereigns – Asia Pacific: Currency depreciation highlights a range of risks across the rating spectrum

15 September 2022

Over recent months, dollar appreciation on the back of tightening by the US Federal Reserve (Fed) and higher commodity prices have resulted in most currencies across Asia Pacific (APAC) and beyond coming under significant depreciation pressure. 


Non-Investment-Grade Sovereigns – Global Headwinds raise credit pressure

1 September 2022

Rating actions for non-IG EM sovereigns between March and early September 2022 primarily reflect the change in credit conditions stemming from Russia’s invasion of Ukraine, with Emerging Europe including Eurasia seeing the bulk of negative actions. In terms of ESG-related drivers of rating actions, governance considerations were most pertinent over this period


Sovereigns – Asia Pacific – Currency depreciation highlights a range of risks across the rating spectrum

15 September 2022

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


Government Policy – China – Rising state role in PE market boosts some sectors but brings about credit risk

15 September 2022

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.


Emerging Markets – Global – Economic outlook dampens as financial conditions deteriorate

15 September 2022

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. 


Emerging Markets – Asia 2022 Summit – MDBs, policymakers can arrest decline in funding diversity for EM Asia infrastructure

13 September 2022

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.


Cross-sector - Islamic Finance: Sukuk issuance to remain under pressure

12 September 2022

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


Macroeconomics - Emerging Markets: Domestic economic and political factors will influence EM exchange rate stability as global financial conditions tighten

8 September 2022

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

Government of Sri Lanka - IMF staff-level agreement reopens door to external financing, a credit positive

2 September 2022

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.

Government of Mongolia - ADB funding will support targeted fiscal spending, alleviate external liquidity strains

2 September 2022

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. 

Government of Pakistan - IMF approves $1.1 billion disbursement and loan programme enhancement, a credit positive, but risks remain

31 August 2022

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.

Sovereigns - Global: Some lower-income economies have strengthened their credit quality through a range of policies

30 August 2022

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


Emerging & Frontier Markets – Global: Most EMs will avert a debt crisis but frontier markets are exposed to turning credit cycle

26 August 2022

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.

Government of El Salvador: Debt buyback operation likely to be considered a distressed exchange

12 August 2022

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.

Sovereign – Gulf Cooperation Council – Hydrocarbon windfall more than offsets credit-negative effects of rising global inflation

27 July 2022

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

Government Policy – Asia-Pacific – Policy response to food shocks will have lasting effects on sovereigns, companies

19 July 2022

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.

Government of Panama - Rising social pressure complicates fiscal consolidation plans

19 July 2022

Given current fiscal dynamics, it looks increasingly difficult for the government to meet its fiscal targets this year.

Government of Belarus - Rouble payment of foreign-currency debt constitutes a default

14 July 2022

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

Sovereigns – Africa: Rollover risk increases amid tighter financial conditions and upcoming maturity wall

28 June 2022

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.

Banks – G-20 emerging markets: Rapid inflation-driven rate hikes will be double-edged sword for banks

27 June 2022

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.

Government of Ukraine: FAQ on economy, liquidity risks and debt sustainability

7 June 2022

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.

Government Policy – Hungary: Windfall taxes will reduce the deficit, but intensify uncertainty for foreign investors and weaken bank profits

1 June 2022

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.

Emerging Markets – Global: Russia-Ukraine conflict heightens risks for nearly 30% of nonfinancial companies

19 May 2022

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.

Emerging markets: Cryptocurrency adoption is highest among lower rated sovereigns, increasing their macro risks

18 May 2022

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

Banking – Emerging markets: New risks from Ukraine conflict create diverging paths for emerging market banks

17 May 2022

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

Emerging Markets - Global: Russia-Ukraine shock amplifies pandemic led credit deterioration for many sovereigns

21 April 2022

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


Russia-Ukraine crisis dents but does not derail global economic recovery; impact on emerging markets most acute

12 May 2022

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.


Government of South Africa: FAQ on the fiscal and growth outlook, and resilience to shocks

4 May 2022

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.


IMF Spring Meetings: Social and political risks tighten brake on globalization as crisis fighting fatigue sets in

28 April 2022

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.

Adequate capital and liquidity will preserve most African MDBs' credit quality amid challenging operating conditions

27 April 2022

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

FAQ on Turkey's vulnerability to Russia-Ukraine conflict

25 April 2022

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.

Emerging Markets - Global: Russia-Ukraine shock amplifies pandemic economic, fiscal scars for many sovereigns

21 April 2022

Government of Kenya - Rising energy prices increase cost of government’s fuel subsidy and slow pace of fiscal consolidation

18 April 2022


Efforts to attract private infrastructure investment are gaining ground, but scale remains a challenge

6 April 2022

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.

Broadening Russia-Ukraine shock weighs on credit profiles through multiple channels

31 March 2022

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.


CBDCs can promote financial inclusion, stability; success depends on design, institutional credibility

22 March 2022

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.

Sovereigns – Commonwealth of Independent States – Sharp recession in Russia poses immediate sustained risks to CIS credit quality

17 Mar 2022

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.

Sovereigns – Global: Central bank digital currencies offer sovereigns opportunity to improve policy effectiveness and economic performance

14 March 2022

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

Government Policy – China – Two sessions aim for robust growth via targeted support; credit impact subject to policy implementation and transmission

11 March 2022

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.

Sovereigns – Emerging & Frontier Markets: High food prices will exacerbate macroeconomic challenges, raise social risks; Middle East & Africa most exposed

14 March 2022

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

FAQ on credit implications and challenges posed by Russia-Ukraine military conflict

11 March 2022

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.

Government of Egypt - Global capital market disruptions will raise liquidity and external risks if sustained

9 March 2022

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


Regional & Local Governments – China – Q4 2021 Debt and Finances Update

4 March 2022

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

Non-Investment Grade-Sovereigns – Global – Fiscal and debt metrics will remain weaker than pre-pandemic despite continued economic recovery; liquidity, external and social risks loom

2 March 2022

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.

Government of Russia: FAQ on sovereign debt service in Russia

1 March 2022

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

Macroeconomics – Latin America: Inflation Will Stoke More Rate Hikes, Causing Stress Among Consumers And Other Debtors

16 February 2022

Sovereign – Russia & Ukraine: FAQ on heightened tensions and an outright conflict between Russia & Ukraine

8 February 2022

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.

Government of El Salvador: Liquidity and funding pressures remain high as Bitcoin bond issuance set for March

10 February 2022

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.

High dollarization poses long-term risks for banks and for wider financial stability

7 February 2022

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

FAQ on credit implications of Argentina's potential new agreement with the IMF

4 February 2022

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.

Sovereigns – Hydrocarbon exporters: Strengthening global commitment to carbon transition increases longer-term credit risks.

11 January 2022

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


Regional and local governments – Emerging markets: Widening infrastructure gaps present growing fiscal and social challenges

9 December 2021

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

Demographic trends will drive divergence of growth and profitability prospects

8 December 2021

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.

Tourism will recover unevenly through 2024 but region offers solid business prospects

7 December 2021

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 flows to emerging markets face structural headwinds, weighing on growth potential

6 December 2021

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.

Corporates – Latin America & Caribbean: Deforestation intensifies reputational risk for companies operating in Brazil.

2 December 2021

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.