First News
Volume:7, Number:48
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Business & Finance 4

China Downgrade Shows Emerging Market Ratings Stuck in Reverse

Moody’s downgrade on China on May 24 and the likelihood that Brazil and South Africa face further rating cuts in the coming months is highlighting how emerging market credit quality remains stuck in reverse. Since the start of 2014, Reuters analysis shows that the big three rating agencies - S&P Global, Moody’s and Fitch - have racked up more than 150 emerging market downgrades between them. That averages out a roughly one a week and though there have been hopes that rising global growth and commodity prices will ease the pressure, that does not seem to be occurring yet. S&P has more negative outlooks -- effectively downgrade warnings -- than it does positive ones by a score of 26 to 5, its heaviest downward bias ever according to its chief sovereign analyst. After 20 EM downgrades last year, Fitch has already cut seven countries since the start of this one, including Turkey, South Africa, and Saudi Arabia, and El Salvador twice

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