S&P Global Ratings downgraded 12 Emerging Market (EM) sovereigns and upgraded seven others in 2018, representing $399bn and $123bn in rated debt, respectively. It downgraded one EM sovereign in the first quarter of 2018, with $230bn in affected bonds, four EM sovereigns in each of the second and the third quarters ($3bn each), and three sovereigns in the fourth quarter ($163bn). It added that Latin America accounted for 58.3% of the number of EM sovereign downgrades, followed by Eastern Europe, the Middle East & Africa (EEMEA) region with 25% of downgrades, and Asia excluding Japan with 16.7% of total EM downgrades last year. In parallel, S&P upgraded one EM sovereign in each of the first and the second quarters of 2018, with amounts of $73bn and $11bn affected, respectively. It also upgraded three sovereigns in the third quarter ($29bn) and two others in the fourth quarter ($10bn) of 2018. It indicated that the EEMEA region accounted for 71.4% of EM sovereign upgrades, while Asia excluding Japan and Latin America represented 14.3% each of the total last year. It considered that several risks threaten the stability of EM sovereign ratings this year, including tensions surrounding global trade, volatility in the financial markets, as well as the potential impact of higher global interest rates and a stronger US dollar on EM capital flows.
Source: S&P Global Ratings