«Fitch»: emerging market economies are prone to downgrade in 2016

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«Fitch»: emerging market economies are prone to downgrade in 2016

 

 

 

     

Broker Stock Exchange of Sao Paulo in the Brazilian state of shock from the fall in prices (archival)

Posted: Friday, November 27, 2015

 

LONDON (Reuters) said senior analyst concerned sovereign classifications in agency Fitch Ratings said in an interview, said that emerging markets face a new wave of cut classifications next year, as Brazil is vulnerable to downgrades to «high-risk», while you might get the Middle East and Africa region «negative outlook.» Said James McCormack, head of sovereign ratings at Fitch, told Reuters, that the decline in commodity prices and the modest global growth and the approach of the first to raise US interest rates in about ten years are all factors that pose a threat to the developing world rankings. The agency lowered ratings of 12 economies of emerging economies exporting primary commodities already this year, while 14 countries currently warns including Brazil, Russia, South Africa and Nigeria downgrade or what means giving a negative outlook in terms of rating agencies. It seems that next year will see the same thing probably. McCormack said «I believe that this model will continue to see in the next year». The «Middle East and Africa is the region where most of the cuts we will see in the rankings. It did not give this region by a negative outlook (though more than 20% of sovereign entities which holds a negative view) but we may do it ». One of the most important issues when investors in many of the major emerging markets are on the brink of access to higher risk rating after nearly a decade of classified at investment grades. And Fitch is the only one among the three major agencies that Russia's credit rating at investment grade are classified. All eyes also need to see whether they will follow the example and the Standard & Poor's cut its rating on Brazil to «high-risk» rating of BBB-, the lowest investment grade. McCormack said «Brazil looks more vulnerable countries (for the loss of investment grade)», referring to the budget is not set as the largest concerns. He pointed out that South Africa winning the highest rating grade at BBB and undermines growth falling commodities along with inflation and electricity problems suffer from «gradual and steady deterioration» in its financial position. He said that «in some respects Russia seems to be the least susceptible» to the loss of investment grade, pointing out that dealing with the drop in oil prices was better than Saudi Arabia classified at AA, which conducted a «limited» cuts in its budget. The expectations of continued rise of the dollar with the start of the US raise interest rates one of the factors affecting the emerging markets rankings. McCormack said «there is no historical relationship between the average rating of emerging markets and the interest rate the Federal Reserve (the US central bank), but there is a very close relationship between the dollar and the average rating of emerging markets.»