The negative outlook reflects still present credit challenges stemming from fiscal and external vulnerabilities amid tightening global liquidity conditions and intensifying global trade tensions, despite gradually improving growth prospects.
The region's economic growth momentum will persist while broadly improved debt structures will mitigate risks from tightening global liquidity. Downside risks stem from evolving political landscapes and their policy implications.
Against the background of the ongoing recession across the national economy, Argentina’s provinces will face increased financing costs, weaker debt metrics and greater refinancing risks due to higher interest rates and foreign-currency debt exposure.
As China's regional and local government bond market grows, we see an increasing focus on, and larger quotas for, Special Purpose Project Bond (SPPB) issuances. SPPBs are often labeled revenue bonds in China, but differ from revenue bonds in the US.
An unconventional style of policy execution weighs on market sentiment while policy proposals are credit negative for oil and construction companies and Mexican states in particular.
Rising infrastructure spending as well as the limited borrowing capacity of Chinese regional and local governments (RLGs) mean high liabilities of local state-owned enterprises (SOEs) will continue to grow, constraining the credit quality of RLGs.
Our stable outlook for African banks reflects expectations of a slight acceleration in growth and stricter regulation that supports financial stability; but risks are titled to the downside.
The change will help to address the mismatch between regional and local governments' limited fiscal resources and significant regional social spending responsibilities.
Stable rating trends for non-financial corporates in Asia Pacific is likely to continue through 2018 but intensifying US-China trade disputes and slowing growth increase downside risks.
Declining federal transfers, weak own-source revenue and higher levels of current expenditure are leading to lower levels of infrastructure spending by Mexican states, a credit negative.
Continued, though slowing, GDP growth in Asian and global economies will support stable credit conditions. Rated companies’ financial leverage will improve slightly on moderate earnings growth.
Our outlook balances strong domestic growth and other buffers in most emerging markets with more challenging credit conditions, as global growth slows, interest rates rise and the effect of US-China trade frictions unfolds across the global economy.
Insurance markets in six major Association of Southeast Asian Nations (ASEAN) are at various stages of development. Their insurance growth prospects are supported by strong socio-economic fundamentals.
The Chinese government is likely to continue to tolerate isolated bond defaults because it considers liquidation as one of the options in resolving debt problems of zombie companies.
Overall leverage is moderate in LatAm compared to other regions, which supports their economies' resilience to shocks. Exceptions include Argentina, Barbados, Belize and Jamaica.
Jair Bolsonaro’s election as Brazil's president will improve investor sentiment, bolstering the real and business confidence, but the exact direction of his economic policy remains unproven.
This edition shows LatAm high-yield issuances in 9M 2018 at lowest level since 2011 on fewer deals from Petrobras, external uncertainties and country-specific issues.
We expect Russian non-financial companies' credit quality to remain stable in 2019 amid continued modest economic growth. However, the threat of additional US sanctions remains a key risk.
High debt burdens and institutional limits related to fiscal management constrain the fiscal profiles of many Caribbean sovereigns.
Refinancing continues to drive market activity, but issuance levels slow as credit conditions tighten for Asian high-yield.
In this report, we compare the standalone credit profiles of banks in Brazil, Russia, India, China and South Africa (BRICS). The overall credit profile of Chinese banks is the strongest and that of Russian banks is the weakest.
Commodity- and remittance-dependent Central Asian economies experienced high growth historically, but sustainability of their economic models are now in question.
The Chinese government’s increasing focus on environmental protection will lead to an increase in costs and potential production suspensions in various commodity sectors.
The average covenant quality score for the full-package EM bonds is 2.80 (moderate), considerably stronger than the 3.31 average (moderate ↓) for EMEA (excluding EM) and 3.75 (weak) for North American full-package bonds.
Mexico’s minimum 3% leverage ratio will ensure banks do not increase their balance sheets excessively relative to core capitalization.
Sri Lanka, Armenia and Pakistan are vulnerable to tightening funding conditions in the next couple of years, while Tajikistan and Zambia are exposed over the next decade.
Sri Lanka, Armenia and Pakistan are vulnerable to tightening funding conditions in the next few years, while Tajikistan and Zambia are exposed over the next decade.
Brazil’s fintech firms are taking advantage of a large population, low levels of financial inclusion and a smartphone-friendly generation to offer low or even no-cost products and services.
Argentines remain confident in the banking system and have not significantly withdrawn deposits. For now, liquid assets at banks remain ample in both US dollars and pesos, limiting funding and foreign currency risks.
On 30 September, trade ministries from the US, Canada and Mexico announced a revamped North American Free Trade Agreement. This development reduces trade-related uncertainty, supporting Mexico's and Canada's near-term growth and investment prospects.
Argentina and Ecuador are the most exposed to tightening in global financing conditions. Credit risks are mitigated for most across Latin America.
Our outlook for Brazil's banking system is stable and reflects our view that a growing economy will boost business for banks over the outlook period.
The new tariffs mark a significant escalation of the ongoing trade dispute between the two countries and apply to a broad spectrum of Chinese products.
High loan and deposit concentrations raise the risk of credit losses and a liquidity shortage.
Rapid and divergent demographic changes in Asia Pacific over the next decade will lead to opportunities for some of the 17 banking systems in the region and challenges for others, including from the effects of shrinking prime-age populations.
Indonesia’s strengthened policy framework is containing credit risks associated with the rupiah’s rapid decline. But additional currency weakness would have economy-wide credit-negative effects.
We expect commodity prices in rand terms to remain broadly flat, so margins will be determined by production costs.
South African companies are less exposed to currency volatility than firms in other emerging markets. This is because South Africa’s deep and well-developed rand debt capital market has reduced the need for companies to use foreign currency debt.
Most Turkish companies we rate can cope with the weak domestic operating environment because of their robust business profiles, balance sheet strength and healthy liquidity.
China's pledge of $60 billion in financial support to African governments is an important financing source for their infrastructure investment, but will amplify existing risks.
Our view on the impact of the recent weakening of the Indian rupee against the US dollar and its impact on rated Indian corporates.
Securitisation has proved to be a valid source of funding for the South African economy over a long period, financing loans granted to households - particularly mortgages - and to small and medium-sized enterprises.
This addendum to our March 2018 study compares the credit performance of projects located in advanced economies with projects located in emerging market and developing economies.
This semi-annual chartbook brings together an overview of our rated developers in Indonesia, covering key credit themes, rating trends, as well as economic indicators.
We expect total sukuk issuance to be broadly stable in 2018, although the sector's long term prospects remain strong.
We expect the government to scale up borrowing through government-related entities, which will increase contingent liability risks.
Argentina's central bank raised the country’s benchmark interest rate to 60% from 45%, which along with the weak peso will keep corporate leverage and margin metrics stressed through 2019.
Russian oil-producing regions will benefit from higher corporate income tax collection from oil companies.
Domestic issuers' high exposure to Turkey’s macroeconomic environment and banking system means they will likely face adverse impact if credit pressures in the sovereign environment persist.
This compendium brings together Moody’s recent research on African sovereign, banking and corporate finance credit.
Year-on-year nationwide contracted sales growth picked up in July but will slow during the remainder of the year. Rated developers have high refinancing needs over the next 12 months.
Large shareholders that secure loans by pledging their shares in onshore-listed companies face increasing refinancing risk, which could have knock-on effects for the companies.
Higher oil prices and rising interest rates will have varying credit implications for the Indian sovereign and banking sector.
A new round of financial volatility is rattling Argentina's economy while a massive corruption scandal is hitting big companies. This report looks at how these events affect credit issuers.
The Chinese sectors with the most immediate exposure are within high-value manufacturing, while US companies with a high reliance on Chinese imports will also incur negative effects.
Investor concerns about Turkey's economic and financial stability have sparked a renewed focus on the vulnerabilities of other emerging and frontier markets.
Growth prospects for many of the G-20 economies remain solid, but there are indications that the synchronous acceleration of growth heading into 2018 is now giving way to diverging trends.
Intensified regulatory measures continue to constrain shadow banking growth.
The Indian government's planned capital support will restore capital adequacy at weak public sector banks but stress will remain due to their fundamental weaknesses.
Brazil's infrastructure quality lags behind that of regional peers, and mobilizing private capital will be key to increasing investment in the sector.
The default rate for high-yield non-financial companies in Asia is expected to be low at 1.7% at the end of 2018, but clouded by escalating US-China trade tensions and tightening liquidity.
The fall in the lira and rise in borrowing costs increase risks that the country may struggle to fund its large external funding needs.
Credit metrics for most non-financial Mexican companies will remain stable overall through 2019, despite uncertainties around new government's policies.
Low trade and investment links between the two countries limithe credit impact for Canada's central and provincial governments and corporates, but universities will lose some revenue.
This compilation highlights recently published research on Russia, covering plans to raise the retirement age and VAT, impact of the world cup, sanctions on Russia and presidential election.
Belarus and Ukraine are most vulnerable to the negative economic impact of changing demographics, whereas Kyrgyz Republic is most exposed to their credit-negative fiscal implications.
Rated developers to face high refinancing needs over the next 12 months. Year-on-year nationwide contracted sales growth picked up in June 2018 but will slow down for the rest of the year.
More consumption-based growth in China will have mixed credit implications for African sovereigns, but growing investment should help close the continent's infrastructure deficit.
Prolonged tightening of external financing conditions would heighten vulnerability forArgentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey and Zambia.
All but five of the 49 rated South and Southeast Asian high-yield companies have protections to limit the effect of a significant depreciation of their local currency against the US dollar.