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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)
In recent months we have witnessed a notable compression in sovereign CDS at the global level, in an economic scenario that is full of uncertainty and in which public debt is at an all-time high.
The search for yield and looser monetary policies across the board, favor sovereign spreads compression, despite a worsening global outlook, poorer incoming data and balance of risks, and the lack of improvement of fiscal disequilibria.
Against a background of increasing concerns on economic cycle strength and uprise of global trade tensions, the central banks' more dovish tone helps that financial tensions and global risk aversion remain bounded.