Global rating agency Moody’s has cautioned that 2020 would be a challenging year for Emerging Market (EM) sovereigns, sub-sovereigns, corporates and financial institutions globally.
The EM issuers will be hit by coronavirus-linked curbs which would invite a deep global recession, Moody’s suggested in the fourth edition of its Emerging Markets C h a r t b o o k r e l e a s e d yesterday.
“The global recession is deepening as coronavirusrelated restrictions exact a high economic cost, and we now expect real GDP to contract by 1.0 percent for G-20 emerging market economies in 2020,” said Denis Perevezentsev, a Moody’s Vice President and Senior Credit Officer.
“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 m a r k e t s , ” a d d e d Perevezentsev.
Moody’s rates 106 emerging market sovereigns — a figure which has seen consistent growth from just 63 in 2004 — and over 1,600 non-sovereign issuers from 70 EM countries.
Emerging Europe accounts for 19 percent of all rated EM non-sovereign issuers and Africa and the Middle East for 15 percent. Negative bias – the share of ratings with a negative outlook or under review for downgrade – is particularly high among Africa and Middle East issuers, at 50 percent, and more moderate at 19 percent for Emerging Europe.
EMEA also accounts for 25 percent of rated EM nonfinancial corporates, with a large portion concentrated in Russia and South Africa.
57 percent of rated non-financial corporates in Africa and the Middle East had a negative bias as of 30 April 2020, driven by sovereign pressures in South Africa and Oman, compared to 22 percent in Emerging Europe.
Furthermore, 65 percent of non-financial corporates in Emerging Europe and 41 percent in Africa and the Middle East have stable outlooks.
