Country Risk Quarterly Report. Fourth Quarter 2019

Further improvement of sovereign risk measures across the board, driven by a protracted search for yield, against the background of supportive central bank policies, together with better incoming cyclical data, muted inflation and some de-escalation of global uncertainties (trade war)

Key points

• Key points:
• Mostly positive cycle of updates from the rating agencies, with changes concentrated in Europe (Greece, Ireland, Bulgaria and Czech Rep.), in line with our analysis
• The strong narrowing of sovereign CDS continues across the board. Median spread has reached yet a new minimum level since the Global Financial Crisis (GFC).
• Financial tensions (FT) have relaxed across different regions and across different markets and assets, with the only exception of some Latam countries
• Private leverage continues growing in China, maintaining its large imbalance with respect to the estimated equilibrium level. High financial vulnerabilities such as excess private leverage and housing prices continue to be concentrated in some advanced economies

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