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img_publication Watch

Country Risk Report. Second Quarter 2017

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Financial tensions, Global Risk Aversion (GRA) and sovereign markets spreads have been decreasing for over a year, reaching lows not seen since the spring of 2014 or 2007. Most of the large sovereign spread’s increases seen during the turmoil in 2015 and 2016 in EMs has vanished


Summary

  • China and Hong Kong were downgraded by Moody’s. Italy was downgraded by Fitch and South Africa by S&P. Argentina and Indonesia were upgraded by S&P
  • Financial tensions, Global Risk Aversion (GRA) and sovereign markets spreads have been decreasing for over a year, reaching lows not seen since the spring of 2014 or 2007. Most of the large sovereign spread’s increases seen during the turmoil in 2015 and 2016 in EMs has vanished
  • The overall decrease in sovereign spreads has lead this quarter to be one of the few times when we have seen more countries with upgrade rather than downgrade pressure
  • Overall, the net aggregate of vulnerabilities seem to be improving in EMs and seem stable in DMs when analyzed by regions
  • We observe signs of deceleration for a consecutive quarter in China’s excessive private leveraging process, and in housing prices, although annual growth levels remain excessive. An accumulation of excess leverage is found in some advanced economies such as Canada, Australia, Norway and some North-European countries
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