emerging markets credit research economic …...2020/07/15 · pressure their fiscal positions and...

July 15, 2020

Emerging Markets Monthly Highlights

Deeper Economic Contraction, Higher Leverage, Slower Recovery

Economic Research

Tatiana Lysenko

Elijah Oliveros

Vishrut Rana

Credit Research

Jose Perez Gorozpe

Xu Han

Sudeep Kesh

Vincent Conti

No content below the line

Contents

Key Takeaways

Economic and Credit Conditions Highlights

Macro-Credit Dashboards

GDP Summary

Monetary Policy/FX

Financial Conditions Highlights

Ratings Summary

2

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak about midyear, and we are using this assumption in assessing the economic and credit implications. We believe the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.


Key Takeaways

We now project a deeper GDP decline in 2020 for most emerging market (EM) economies, mostly due to the worsening pandemic and a steeper fall in exports. Our forecast is for the average EM GDP (excluding China) to contract 4.7% this year and grow 5.9% in 2021.

Better financial conditions and a gradual economic recovery in key trading partners are supporting the return to growth in EMs, but investor sentiment remains fragile.

Risks remain firmly on the downside, the deep economic shock in 2020 will spike debt levels across governments, corporations, and households in EMs, some of which were suffering from already high debt burdens prior to the pandemic. Lockdown fatigue driven by mounting political pressures and economic costs could lead to poor policy choices.

The efforts governments have taken to tame the pandemic and support their economies will pressure their fiscal positions and will combine with risks that were present prior to the crisis. EMs will face rising leverage, weak revenues, and potential for rising social unrest, given that the pandemic has made evident deep income disparities and poor access to health services.

Issuers will remain under pressure over the coming months. Those able to stay afloat during the severe downturn will probably do with higher debt levels and weaker profits.

3


EMs | Slow Recovery, Prevalent Risks

4

Source: Credit Conditions Emerging Markets: Slow Recovery, Prevalent Risks, June 30, 2020. S&P Global Ratings.

Overall: Credit conditions in EMs show some improvement thanks to better financing conditions, the expectation of a more evident global economic recovery, and the stabilization of--in some cases increasing--commodity prices.

Risks: Many key EM economies have failed to contain the epidemic. Mounting political pressures and economic costs are forcing some countries to lift the lockdowns despite increasing COVID-19 cases, which could undermine a potential recovery. Debt buildup across sectors increases vulnerability to weaker economic conditions.

Credit: Credit fundamentals are weakening for most sectors reflecting the deep economic shock, rising leverage, and the expectation of a slow economic recovery in EMs.

Feeble conditions and a lockdown fatigue spur

social unrest

COVID-19 outbreak persists, risk of poor policy choices rises

Economic spillovers from U.S.-China

strategic confrontation

Debt buildup increases vulnerability to weaker

economic conditions

Volatile financing conditions could limit

market access

Volatile commodity prices

Top EMs Risks

https://www.spglobal.com/ratings/en/research/pdf-articles/2020-06-30-credit-conditions-emerging-markets-slow-recovery-prevalent-risks


EMs | Deeper Economic Contraction in 2020

5

S&P Global Ratings now forecasts a deeper economic contraction in 2020 for most key EM economies. Our downward GDP revisions mostly reflect the overall worsening pandemic among many EMs and a larger hit to foreign trade compared to our expectations at the end of April. Our forecast is for the average emerging market GDP (excluding China) to contract by 4.7% this year, and then to grow 5.9% in 2021.

Better financial conditions and a gradual recovery in key trading partners are supporting the return to growth in emerging markets, but investor sentiment remains fragile.

Source: Oxford Economics. F forecast.

GDP Growth In Key EMs

-10 -5 0 5 10 15

ARG

MEX

BRL

ZAF

CHL

THA

COL

IND

RUS

SAU

POL

TUR

PHL

MYS

IDN

CHN

2020F 2021F

Change In Baseline Forecast From April 2020

-8 -6 -4 -2 0 2

ARG

MEX

BRL

ZAF

CHL

THA

COL

IND

RUS

SAU

POL

TUR

PHL

MYS

IDN

CHN

2020F 2021F


EMs | Permanent Economic Damage

6

We expect the pandemic-related downturn to leave long-lasting scars on EM economies, with higher debt levels, subdued investment, and in some cases, considerable damage to labor markets leading to permanent output losses.

In other words, we forecast EM economies to be permanently smaller compared to our pre-COVID projected GDP trajectory, with the gap relative to the pre-COVID GDP path as large as 11% in India, 6%-7% in most of Latin America and South Africa, 3%-4% in most of Emerging Europe, and 2% in Malaysia and Indonesia.

Source: S&P Global Ratings, Oxford Economics. Note: aggregates are based on GDP PPP weights.

Gap In Projected GDP Level Vs. Pre-COVID-19 GDP Path, %

-12

-10

-8

-6

-4

-2

0

2019 2020 2021 2022 2023

LatAm EM-EMEA EM-Asia Ex. India India


EMs | Sovereign Fiscal Pressures

7

COVID-19 has upended all previous assumptions about credit trends. Activity in EM economies contracted sharply; international trade and travel are down; lower revenues and measures to offset the shock of the pandemic are resulting in large fiscal deficits and higher public debt levels in EMs.

Many of EMs negative outlooks reflect concerns that feeble economic recovery could worsen the sovereigns' debt and fiscal metrics, resulting in a downgrade.

Source: S&P Global Ratings, Sovereign Risk Indicators, July 14, 2020

General Government Primary Balance % Of GDP

Net General Government Debt % Of GDP

0

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

90

100

ARG IND ZAF BRL MYS CHN COL POL MEX PHL TUR IDN THA CHL RUS

2019 2020F 2021F 2019 Avg. 2020 Avg.

-12

-10

-8

-6

-4

-2

0

2

4

CHL BRL ZAF ARG RUS COL PHL IND POL IDN THA MYS CHN TUR MEX

2019 2020F 2021F


EMs | Increasing Leverage Across Sectors

8

Corporate leverage is generally much higher than during the Great Financial Crisis. Businesses with greater exposure to COVID-19 impacts across EMs include hotels and gaming, media and entertainment, and transportation sectors.

We expect a slow recovery across EMs, which will continue pressuring most of their corporations. The downgrade potential remains higher than historical levels. Therefore, extended lockdowns, a slower recovery, or a second wave of infections could result in more downgrades and defaults across EMs. High-yield issuers, especially those in the 'B' category, are the most vulnerable to a downside scenario.

Data as of July 10, 2020. Rating in parenthesis denotes median rating for sector across EMs. Source: S&P Global Market Intelligence Capital IQ, S&P Global Ratings.

Debt To EBITDA Among EM Corporations

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Median Debt-EBITDA (Current) Median Debt-EBITDA (GFC)

Corporations Median Current Corporations Median GFC


Regional Economic Highlights


APAC EM Economics| Mobility Gradually Stabilizing

10

COVID-19 outbreaks not fully contained in parts of Asia. India, Indonesia, and the Philippines are still reporting an increasing number of new cases, but have been gradually easing lockdown measures to prevent further economic costs. Mobility remains highly restricted in India and the Philippines, where tight lockdowns have not stamped out the virus. Indonesia, on the other hand, has not severely restricted mobility through the crisis, and mobility is currently only about 23% below normal.

Economic activity still weak, but recovering very gradually. High frequency data in June continue to show weak economic activity with gradual improvement starting in May.

Source: Google LLC "Google COVID-19 Community Mobility Reports", S&P Global Ratings. Notes: The baseline is the median value, for the corresponding day of the week, during the 5-week period Jan 3Feb 6, 2020.

Mobility Rising In Emerging Asia As Lockdowns Ease, But The Pandemic Is Not Fully Contained

Vishrut Rana, Singapore, +65-6216-1008, [email protected]

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

7 d

ay m

ovin

g a

ve

rag

e, %

fro

m n

orm

al

Mobility For Retail and Recreation

India Indonesia Malaysia Philippines Thailand


EM EMEA | Uneven Economic Dynamics Reflecting Different Economic Structures

11

Industrial output rebounded in Poland and Turkey in May as lockdowns were eased at home and in the Eurozone, the major trading partner, but remains well below pre-COVID levels.

The drop in industrial production in Russia was milder over March-April, reflecting a different economic structure, including higher share of energy and large state enterprises. However it dropped further in May, as oil production was cut under OPEC+ deal.

Activity in all three economies should continue to recover, as infection curves are flattening and confidence returns gradually. Risks are more balanced but remain on the downside, tied to the evolution of the pandemic at home and abroad.

Source: Datastream, S&P Global Ratings.

Industrial production, M/M (Seasonally Adjusted)

-40

-30

-20

-10

0

10

20

Poland Russia Turkey

Mar Apr May


LatAm Economics| Hit To Growth From COVID-19 Has Been Uneven, And So Will Be The Recovery

12

We lowered our 2020 GDP forecast for LatAm by just over 2 percentage points to a contraction of roughly 7.5%. We expect growth to be just shy of 4% in 2021.

COVID-19 is far from contained in the region. In most LatAm countries, daily infection rates at least doubled in June. There are, however, some encouraging signs in Chile, where the pace of new infections has fallen modestly in recent weeks.

Uneven hit, uneven recovery. The pernicious impact on LatAm economies is far from uniform, with Peru among the worst hit, and Chile the least. We see the recovery also as choppy, and expect countries with stronger policy support such as Chile, recovering faster and with lower permanent losses, than countries such as Mexico, where policy support has been limited.

Source: Haver Analytics.

Economic Activity Indices, % M/M (Seasonally Adjusted)

Elijah Oliveros-Rosen, New York, +1-212-438-2228, [email protected]

-30

-25

-20

-15

-10

-5

0

Argentina Brazil Chile Colombia Mexico Peru

March April


Macro-Credit Dashboards


GDP Summary | LatAm Will Experience Among The Weakest Recoveries In EMs

14

Source: Haver Analytics, S&P Global Ratings. Note: Red means GDP growth is below five-year average (2015-2019). Blue means the opposite. F Forecast.

Country.Latest reading

(y/y)Period

5-year avg.

2019 2020f 2021f 2022f

Argentina -5.4 Q1 -0.3 -2.2 -8.5 2.9 2.7

Brazil -0.3 Q1 -0.6 1.1 -7.0 3.5 3.3

Chile 0.4 Q1 2.1 1.0 -6.5 5.5 3.5

Colombia 1.1 Q1 2.4 3.3 -5.0 4.5 3.6

Mexico -1.4 Q1 2.1 -0.3 -8.5 3.0 2.3

China -6.8 Q1 6.7 6.1 1.2 7.4 4.7

India 3.1 Q1 6.9 4.2 -5.0 8.5 6.5

Indonesia 3.0 Q1 5.0 5.0 0.7 6.7 5.5

Malaysia 0.7 Q1 4.9 4.3 -2.0 7.5 6.1

Philippines -0.2 Q1 6.4 6.0 -3.0 9.4 7.6

Thailand -1.8 Q1 3.4 2.4 -5.1 6.0 4.6

Poland 1.7 Q1 4.2 4.2 -4.0 5.0 2.7

Russia 1.6 Q1 0.8 1.3 -4.8 4.5 3.3

Saudi Arabia -1.0 Q1 1.6 0.3 -4.5 2.2 2.7

South Africa -0.1 Q1 0.8 0.2 -6.9 4.7 2.0

Turkey 4.5 Q1 4.1 0.9 -3.3 4.5 3.6


Monetary Policy/FX | More Rate Cuts In June, But More EM Central Banks On Hold, Notably In Turkey; FX Was Mixed

15

Source: Bloomberg, Haver Analytics, S&P Global Ratings. Note: Red means inflation is above the target range, policy is tightening, and exchange rate is weakening. Blue means the opposite. A positive number for the exchange-rate change means appreciation. Argentina's central bank no longer targets inflation, nor does it set the policy rate directly (it is set based on monetary aggregates targeting). For China, we use the PBOC's seven-day reverse repo. YTD is as of June 30.

CountryPolicy

rateInflation target

Latest inflation

reading

Latest rate decision

Next meeting

June exchange rate chg.

YTD exchange rate chg.

Argentina 38.00% No Target 43.4% N/A N/A -2.7% -15.0%

Brazil 2.25% 4.25% +/-1.5% 1.9% 75 bps cut Aug. 05 -2.4% -26.3%

Chile 0.50% 3% +/-1% 2.6% Hold Jul. 15 -1.8% -8.3%

Colombia 2.50% 3% +/-1% 2.2% 25 bps cut Jul. 31 -0.7% -12.8%

Mexico 5.00% 3% +/-1% 3.3% 50 bps cut Aug. 13 -3.6% -17.8%

China 2.20% 3% 2.5% Hold N/A 1.0% -1.4%

India 4.00% 4% +/-2% 5.8% 40 bps cut N/A 0.1% -5.7%

Indonesia 4.25% 3.5% +/-1% 2.0% 25 bps cut Jul. 16 2.4% -2.8%

Malaysia 1.75% No Target -2.9% 25 bps cut Sep. 10 1.4% -4.6%

Philippines 2.25% 3% +/-1% 2.5% 50 bps cut Aug. 20 1.6% 1.7%

Thailand 0.50% 2.5%+/-1.5% -1.6% Hold Aug. 05 2.9% -3.0%

Poland 0.10% 2.5% +/-1% 2.9% Hold Sep. 09 1.3% -4.1%

Russia 4.50% 4.00% 3.2% 100 bps cut Jul. 24 -1.5% -12.9%

Saudi Arabia 1.00% 3% +/-1% 1.0% Hold N/A 0.0% 0.0%

South Africa 3.75% 3%-6% 2.9% 50 bps cut Jul. 23 1.1% -19.2%

Turkey 8.25% 5% +/-2% 12.6% Hold Jul. 23 -0.4% -13.2%


Real Effective Exchange Rates | Asian Currencies Have Depreciated Less

16

Source: S&P Global Ratings, Haver Analytics, J.P. Morgan. Note: Data is computed on 10 years of the monthly average data of the J.P. Morgan Real Broad Effective Exchange Rate Index (PPI-deflated). Data as of June 30.

Broad Real Effective Exchange Rates, % Change From 10-Year Average

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

BR

L

CO

P

RU

B

MY

R

TR

Y

AR

S

CLP

SA

R

PH

P

ZA

R

MX

N

INR

PL

N

CN

Y

TH

B

IDR

Stronger

Weaker


Real Interest Rates | Very Low or Negative Real Rates In Most Cases

17

10 years of history, we used all the available data to calculate the average. We exclude Argentina. For China, we use the seven-day reverse repo rate. Data as of June 30.

Deviation In Current Real Benchmark Interest Rates From 10-Year Average, bps

-400 -300 -200 -100 0 100 200 300 400 500

PLN

BRL

TRY

CLP

INR

PHP

CNY

RUB

SAR

COP

ZAR

MXN

IDR

THB

MYR

Tighter

Looser


EM Heat Map


19

Color CodingSovereign Each of the factors is assessed on a continuum spanning from 1 (strongest) to 6 (weakest). Based on Sovereign Rating Methodology. Dec. 23, 2014.Financial Institutions BICRA The overall assessment of economic risk and industry risk, which ultimately leads to the classification of banking systems into BICRA groups, is determined by the number of

-Banking Industry Country Risk Assessment Methodology and Assumptions, Nov. 09, 2011; and Banks Rating Methodology and Assumptions Nov. 09, 2011.Non-Financial Corporates Ratios are derived from a the Median of Rated Corporates in their respective country, we then rank them according to our Corporate Methodology, Nov. 19, 2013 by using table 17, with levels that go from minimal to highly leveraged. ° - We assess return on capital by using the median of our rated corporates in their respective country, then we adjust for inflation, we then rank it based on our Corporate Methodology, Nov. 19, 2013. * - Non financial corporates debt and foreign currency denominated debt is based on IIF global debt monitor with data as of March 2020.t - Source: Bangko Sental NG Pilipinas; S&P Global Ratings.Source: S&P Global Ratings.


Financing ConditionsHighlights


EMs Financing | Spreads Ease, Risk Aversion Persists

21

Note: Data as of June 30, 2020. Source: S&P Global Ratings Research, Thomson Reuters, ICE Data Indices, Federal Reserve Bank of St. Louis.

• Relatively tapered spreads.

EM credit spreads continued to taper in June, lower than regional decade highs in March. Nevertheless, risk aversion remains elevated by persistently higher spreads in June than in early 2020.

• Risk aversion persists. Lower-rated issuers continue to see asymmetric pricing pressure due to elevated business and financial risk, as well as default risk for the lowest rated issuers, due to the compounding effect of capital market volatility and

revenues.

0

500

1000

1500

2000

2500

EM Corp EM Corp Asia EM Corp LatAm EM Corp EMEA

EM Spreads By Region (levels, in bps)

GFC Peak EM Decade High Weekly Averages Beg. of 2020 Recent

0

500

1000

1500

2000

2500

3000

US IG US HY EM Corp IG EM Corp HY

US And EM Spreads (levels, in bps)

GFC Peak EM Decade High Weekly Averages Beg. of 2020 Recent


EMs | Corporate Issuance

22Data as of June 30, 2020. Data including NR (not rated) and both financial and non-financial entities. Source: S&P Global Ratings Research, Thomson Reuters.

May, 98Jun, 112

0

50

100

150

200

250

300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

EM (ex. Greater China) Cumulative Corporate New Bond Issuance

2016 2017 2018 2019 2020($ Bil.)

0

200

400

600

800

1000

1200

1400

0

20

40

60

80

100

120

2016 2017 2018 2019 2020

EM Regional New Bond Issuance

EMEA (LHS) Emerging Asia (ex. GC) (LHS) Latin America (LHS) Greater China (RHS)(Bil. $) (Bil. $)


Financial And Non-Financial Corporates Bond Issuance | Large Deals Boost 2020 YTD Issuance In Most Markets

23

Data as of June 30, 2020. Source: S&P Global Ratings, Thomson Financial.

Petronas Capital (6bn)

PT Indonesia Asahan Aluminum

(2.4bn)

PLN (Indonesia, 2.9bn), ThaiOil

(2bn)

0

20,000

40,000

60,000

80,000

100,000

120,000


Asia (ex. China)

2019 Issuance 2020 Issuance 2020

Agricultural Bank of China (12bn),

Shanghai Pudong Dev't Bank (7bn),

Bank of China (5.6bn)

Bank of Communications (5.6bn), Tencent (6bn), Ping An Bank (4.2bn)

China Minsheng Bank (7bn), EXIM

Bank (4.2bn)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000


Greater China


Ecopetrol (Colombia, 2bn), Banco Santander Mexico (1.75bn)

Metro (Chile, 1.5bn), Deutsche Bank Brazil (1.3bn), America Movil

(Mexico, 1bn)

CEMEX (1bn)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000


LatAm


Chinese banks (56bn), Sinopec

(2.8bn), PetroChina (2.8bn)

Broader Chinese FI (52bn), $8bn from

Chinese real estate and $6bn from

Tencent

Chinese FI (47bn) and real estate (11bn), PLN

Indonesia (2.9bn), Cemex (1bn)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000


EMs


USD Mill. USD Mill.

USD Mill. USD Mill.


Financial And Non-Financial Corporates Bond Issuance | Capital Costs Divergent Across EMs, Generally Seeing Longer Maturities

24

Data as of June 30, 2020. Source: S&P Global Ratings, Thomson Financial.

0

2

4

6

8

Average YTM At Issuance Of EM Sub-Regions

Asia (ex. China) Greater China Latin America

0

1

2

3

4

5

6

7

8

9

Median Time To Maturity By EM Sub-Region

Asia (ex. China) Greater China Latin America

• LatAm sees higher cost of debt for new issuances in June with longer maturities as markets show signs of recovery.

• Asia (ex. China) currently shows lower capital costs than LatAm despite both regions seeing rising maturity lengths for new issuances in June. This reflects some differences in credit quality of prevailing issuers, with Asia (ex. China) seeing more investment-grade issuers coming to market than those in LatAm.

• Greater China seeing nearly flat capital costs for limited volume of foreign currency debt with regulations limiting the use of proceeds to refinancing purposes only.

• M&A and leverage loan activity remains muted.

%

Years


EM Corporate Issuance | By Market

25

Data as of June 30, 2020. Source: S&P Global Ratings Research, Thomson Reuters.

(Bil. USD)

112

70

118

101

118

72

124120

36

76

0

20

40

60

80

100

120

140

Domestic Foreign

EM (ex. Greater China) New Issuance By Market

2016 2017 2018 2019 2020


Issuance | Sovereign Top 20 Deals By Debt Amount, Last 90 Days

26

Data as of April 1- July 10, 2020; includes local/foreign currencies. EM excludes China. Red means speculative-grade rating, blue means investment-grade rating, and grey means NR (not rated). Source: S&P Global Ratings Research.

Issue Date Issuer Country Market place S&P issue-rating

S&P sovereign

rating (as of July

13, 2020) Security description Currency Issuance (mil. )

15-Apr-20 Saudi Arabia Saudi Arabia EURO/144A NR A- 4.500% Sr Med Term Nts due '60 USD $ 2,973


22-Apr-20 Mexico Mexico U.S. Public BBB BBB 4.750% Senior Notes due '32 USD $ 2,444

22-Apr-20 Mexico Mexico U.S. Public BBB BBB 5.000% Senior Notes due '51 USD $ 2,315

3-Jun-20 Republic of Brazil Brazil U.S. Public BB- BB- 3.875% Global Notes due '30 USD $ 2,227

6-Apr-20 Indonesia Republic Indonesia U.S. Public BBB BBB 3.850% Global Notes due '30 USD $ 1,643

6-Apr-20 Indonesia Republic Indonesia U.S. Public BBB BBB 4.200% Global Notes due '50 USD $ 1,636


1-Jun-20 Colombia Colombia U.S. Public BBB- BBB- 4.125% Senior Notes due '51 USD $ 1,480

5-May-20 Chile Chile U.S. Public A+ A+ 2.450% Global Notes due '31 USD $ 1,457

27-Apr-20 Philippines Philippines U.S. Private BBB+ BBB+ 2.950% Medium-Term Nts due '45 USD $ 1,350

3-Jun-20 Republic of Brazil Brazil U.S. Public BB- BB- 2.875% Global Notes due '25 USD $ 1,243

27-Apr-20 Philippines Philippines U.S. Private BBB+ BBB+ 2.457% Medium-Term Nts due '30 USD $ 1,000

1-Jun-20 Colombia Colombia U.S. Public BBB- BBB- 3.125% Senior Notes due '31 USD $ 996

6-Apr-20 Indonesia Republic Indonesia U.S. Public BBB BBB 4.450% Global Notes due '70 USD $ 990

22-Apr-20 Mexico Mexico U.S. Public BBB BBB 3.900% Senior Notes due '25 USD $ 990

5-May-20 Chile Chile Euro Public A+ A+ 1.625% Fxd/Straight Bd due '25 EUR $ 553

2-Jul-20 Indonesia Republic Indonesia Foreign Public BBB BBB 1.130% Fxd/Straight Bd due '23 JPY $ 472




Issuance | EM Sovereign Debt

27

YTD data as of June 30, 2020; includes local/foreign currencies. China includes mainland China and Hong Kong. Source: S&P Global Ratings Research.

(Bill.) (Bill.)

$8.9

$1.5

$4.6

$4.0

$6.1

$9.4 $9.2

$3.6 $4.0

$10.9

$2.0

$7.7 $7.4

$3.1

$2.0

$5.3

$1.8

$9.9

$3.6 $3.0

$10.8

$5.0

$11.2

$8.0

$3.4

$7.4

$15.5

$3.0 $3.7

$0.2

$11.9

$4.0

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

2018 2019 2020

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0


Issuance | EM (ex. China) Financial And Non-Financial Top 20 Deals, Last 90 Days

28

Data as of April 1- July 10, 2020; excludes Sovereign. Red means speculative-grade rating , blue means investment-grade rating, and grey means NR (not rated). Table is for foreign currency only without perpetuals. Source: S&P Global Ratings Research.

Issue Date Maturity date Issuer Country Sector Market place S&P issue - rating Security description Currency Issuance (mil.)

14-Apr-20 21-Apr-50 Petronas Capital Ltd Malaysia Financial Institution U.S. Private NR 4.550% Gtd Mdm-Trm Nts due '50 US $ 2,750


24-Apr-20 29-Apr-30 Ecopetrol SA Colombia Integrated Oil & Gas U.S. Public BBB- 6.875% Sr Unsecurd Nts due '30 US $ 1,982

11-May-20 19-May-31 Deutsche Bank SA Brazil Banks Euro Public BB+ Reset MTN's due '31 EUR $ 1,344


24-Apr-20 4-May-22 CII Mexico Broker Euro Public NR 0.750% Medium-Term Nts due '22 US $ 1,000

4-May-20 5-Jul-30 America Movil Sab De Cv Mexico Telecommunications U.S. Public BBB+ 2.875% Senior Notes due '30 US $ 999

11-May-20 15-May-25 PT Indonesia Asahan Aluminium Indonesia Metals, Mining & Steel U.S. Private NR 4.750% Sr Unsecurd Nts due '25 US $ 990

22-Jun-20 30-Jun-50 Perusahaan Listrik Negara PT Indonesia Utility U.S. Private BBB 4.000% Sr Med Term Nts due '50 US $ 983

11-May-20 15-May-30 PT Indonesia Asahan Aluminium Indonesia Metals, Mining & Steel U.S. Private NR 5.450% Sr Unsecurd Nts due '30 US $ 977

24-Jun-20 30-Jun-25 APICORP Saudi Arabia Finance Company Euro Public NR 1.460% Sr Med Term Nts due '25 US $ 750

22-Jun-20 16-Jan-50 Fomento Econo Mexicano Mexico Consumer Products U.S. Public A- 3.500% Sr Unsecurd Nts due '50 US $ 718

2-Jul-20 9-Jul-30 JGSH Philippines Ltd Philippines Finance Company Euro Public NR 4.125% Gtd Sr Unsec Nt due '30 US $ 600

11-Jun-20 18-Jun-50 Thaioil Treasury Ctr Co Ltd Thailand Broker U.S. Private BBB+ 3.750% Gtd Mdm-Trm Nts due '50 US $ 600

4-May-20 11-May-30 Hutama Karya PT (Persero) Indonesia High Technology U.S. Private NR 3.750% Gtd Mdm-Trm Nts due '30 US $ 598

6-Jul-20 13-Jan-26 BDO Unibank Inc Philippines Banks Euro Public NR 2.125% Medium-Term Nts due '26 US $ 597

4-Jun-20 10-Jun-27 PTTEP Treasury Ctr Co Ltd Thailand Finance Company U.S. Private NR 2.587% Gtd Mdm-Trm Nts due '27 US $ 500

12-May-20 19-May-23 Rec Ltd India Financial Institution U.S. Private NR 4.750% Medium-Term Nts due '23 US $ 498

5-May-20 13-May-25 PT Bank Mandiri (Persero) Tbk Indonesia Banks Euro Public NR 4.750% Medium-Term Nts due '25 US $ 496

22-Jun-20 30-Jun-30 Perusahaan Listrik Negara PT Indonesia Utility U.S. Private BBB 3.000% Sr Med Term Nts due '30 US $ 496


Maturing Debt | EM Financial And Non-Financial Top Deals Coming Due In July and August

29

Data as of June 30, 2020 and excludes Sovereign. Red means speculative-grade rating , blue means investment-grade rating, and grey means NR (not rated). Table does not include China deals and data is for foreign currency only without perpetuals. Source: S&P Global Ratings Research.

Issue date Maturity date Issuer Country Sector Market place

S&P issue -

rating Security description Currency Issuance (mil.)

15-Jan-15 23-Jul-20 PEMEX Mexico

Integrated Oil &

Gas Foreign Public BBB+ 3.500% Gtd Sr Notes due '20 US $ 1,499

25-Jul-13 30-Jul-20

AngloGold Ashanti Hlgs

Finance South Africa Finance Company U.S. Public BB+ 8.500% Gtd Global Nts due '20 US $ 1,250

3-Aug-10 11-Aug-20 Danga Capital Bhd Malaysia Finance Company Euro Public NR 3.725% Islamic Finance due '20 SG $ 667

19-Jul-10 26-Jul-20 Bancolombia SA Colombia Banks U.S. Public NR 6.125% Sub Global Note due '20 US $ 610

4-Feb-15 12-Aug-20 Export-Import Bank of India India Banks Euro Public BBB- 2.750% Medium-Term Nts due '20 US $ 497

6-Sep-10 24-Aug-20 Bancomer Mexico Banks U.S. Public NR Float Rate Nts due '20 MP $ 374

28-Aug-15 30-Aug-20 Abdullah Al-Othaim Invest & ReSaudi Arabia

Homebuilders/Real

Estate Co. Foreign Private NR Islamic Finance due '20 SR $ 267

1-Aug-17 7-Aug-20 MayBank Malaysia Banks Euro Private NR 0.190% Sr Med Term Nts due '20 Y $ 181

9-Jan-15 14-Jul-20 Export Import Bank of Thailand Thailand Banks Euro Public NR Flt Rt Sr Bonds due '20 US $ 150

17-Jul-17 24-Jul-20 MayBank Malaysia Banks Foreign Private NR 4.600% St Enterprise due '20 CY $ 148

11-Aug-09 31-Jul-20 South African National Roads South Africa Capital Goods Euro Private NR 9.750% Medium-Term Nts due '20 SAR $ 123

28-Jul-10 28-Jul-20 Ekurhuleni Metropolitan South Africa Utility Euro Private NR 10.560% Fxd/Straight Bd due '20 SAR $ 111

26-Jul-05 26-Jul-20 Konsortium Lapangan Terjaya Malaysia Capital Goods Euro Private NR Islamic Finance due '20 RG $ 101

6-Sep-10 24-Aug-20 Bancomer Mexico Banks U.S. Public NR 7.830% Fxd/Straight Bd due '20 MP $ 83

8-Jul-15 15-Jul-20 KT Kira Sertifikalar Varlk Turkey Finance Company Malaysia Private NR 5.720% Islamic Finance due '20 RG $ 79

8-Feb-10 31-Jul-20 South African National Roads South Africa Capital Goods Euro Private NR 9.750% Medium-Term Nts due '20 SAR $ 68

8-Mar-10 31-Jul-20 South African National Roads South Africa Capital Goods Euro Private NR 9.750% Medium-Term Nts due '20 SAR $ 62



22-Jul-15 27-Jul-20 Clindeb Investments South Africa Broker Euro Public NR Flt Rt Sr Bonds due '20 SAR $ 48


26-Jul-18 3-Aug-20 Cagamas Global Plc Malaysia Finance Company Euro Private NR 2.520% Gtd Mdm-Trm Nts due '20 SG $ 48

19-Jul-18 26-Jul-20 Cagamas Global Plc Malaysia Finance Company Euro Private NR 3.100% Gtd Mdm-Trm Nts due '20 HK $ 45




1-Mar-19 8-Aug-20 MayBank Malaysia Banks Euro Private NR 3.000% Bonds due '20 US $ 25



Ratings Summary


Ratings Summary | Sovereigns In June

31

Note: Foreign currency ratings. NM indicates not meaningful. Red means speculative-grade rating, and blue means investment-grade rating. Data as of June 30, 2020. Source: S&P Global Ratings Research, S&P Capital IQ. *China median rating includes China, Hong Kong, Macau, Taiwan, and Red Chip companies.

Country Rating Outlook

Five-year CDS

spread

Median rating for financial

entities Median rating non-financial entities

Argentina SD NM NM CCC+

Brazil BB- Stable 250 BB-

Chile A+ Negative 85 BBB

China* A+ Stable 50 A BBB

Colombia BBB- Negative 157 BBB-

India BBB- Stable 119 BBB-

Indonesia BBB Negative 131 B+

Malaysia A- Negative 73 BBB+

Mexico BBB Negative 155 BBB- BB+

Philippines BBB+ Stable 65 BBB

Poland A- Stable 58 A- BB+

Russia BBB- Stable 110 BB- BB+

Saudi Arabia A- Stable 107 BBB BBB+

South Africa BB- Stable 305 BB-

Thailand BBB+ Stable 43 A- BBB+

Turkey B+ Stable 488 BB-


Rating Actions | Top 15 By Debt Amount, Last 90 Days

32

Data as of April 1 July 10, 2020, excludes Sovereign, Greater China and the Red Chip companies and includes only latest rating changes. Source: S&P Global Ratings Research.

Rating Date Issuer Country Sector To From Action type

Debt amount

(mil.)

2-Apr-20 Tata Motors Ltd. (Tata Sons Pte. Ltd.) India Automotive B B+ Downgrade $ 5,468

8-Jul-20 Braskem S.A. (Odebrecht S.A.) Brazil Chemicals, Packaging & Environmental Services BB+ BBB- Downgrade $ 4,150

20-May-20 Empresas Copec S.A. (E-Copec) (AntarChile S.A.) Chile Diversified BBB- BBB Downgrade $ 3,900

14-Apr-20 Tata Steel Ltd. (Tata Sons Pte. Ltd.) India Metals, Mining & Steel B+ BB- Downgrade $ 2,300

8-May-20 YPF S.A Argentina Oil & Gas Exploration & Production CCC+ B- Downgrade $ 1,969

26-Jun-20 Shriram Transport Finance Company Limited India Finance Co. BB- BB Downgrade $ 1,803

12-May-20 MTN Group Ltd. South Africa Telecommunications BB- BB Downgrade $ 1,750

18-Jun-20 Oi S.A. Brazil Telecommunications CC B- Downgrade $ 1,654

27-Apr-20 PT Pelabuhan Indonesia II (Persero) (Republic of Indonesia) Indonesia Utility BBB- BBB Downgrade $ 1,600

8-May-20 Pampa Energia S.A. Argentina Utility CCC+ B- Downgrade $ 1,550

12-May-20 Transnet SOC Ltd. South Africa Utility BB- BB Downgrade $ 1,464

28-May-20 Genting Bhd. Malaysia Media & Entertainment BBB BBB+ Downgrade $ 1,400

6-Jul-20 Delhi International Airport Ltd. India Utility B+ BB- Downgrade $ 1,311

22-Apr-20 Companhia Siderurgica Nacional (CSN) Brazil Metals, Mining & Steel B- B Downgrade $ 1,200

26-Jun-20 Axis Bank Ltd. India Bank BB+ BBB- Downgrade $ 1,095


EM | COVID-19 / Oil-Related Rating Actions By Country

33

Note: Data includes Sovereign. Data from Feb. 3, 2020 to June 30, 2020. Source: S&P Global Ratings.

0

5

10

15

20

25

30

35

40

Gre

ater

Ch

ina

Arg

enti

na

Bra

zil

Ch

ile

Co

lom

bia

Gre

ater

Ch

ina

Ind

on

esia

Mal

aysi

a

Mex

ico

Ru

ssia

Sou

th A

fric

a

Turk

ey

Arg

enti

na

Bra

zil

Ch

ile

Co

lom

bia

Gre

ater

Ch

ina

Ind

ia

Ind

on

esia

Mal

aysi

a

Mex

ico

Po

lan

d

Ru

ssia

Sou

th A

fric

a

Thai

lan

d

Turk

ey

Arg

enti

na

Bra

zil

Ch

ile

Co

lom

bia

Gre

ater

Ch

ina

Ind

on

esia

Mex

ico

Ru

ssia

Sou

th A

fric

a

Bra

zil

Gre

ater

Ch

ina

Ind

ia

Ind

on

esia

Mal

aysi

a

Mex

ico

Ru

ssia

Feb March April May June

Downgrade Downgrade + CW Change OL Change CreditWatch Negative


EM | COVID-19 / Oil-Related Rating Actions

34


16

8

5

13

11

5

1

35

2

15

3

41

14

8

37

5

11

8 8

4

11

2

7

0

5

10

15

20

25

30

35

40

45

Argentina Brazil Chile Colombia GreaterChina

India Indonesia Malaysia Mexico Poland Russia SouthAfrica

Thailand Turkey

Rating Downgrade Outlook / CreditWatch Revisions

(Number Of issuers)

• Downgrades related to COVID-19/oil price dislocations. Mexico (35), Argentina (16), and SouthAfrica (15) had the most downgrades since Feb. 3, 2020.

• Outlook/CreditWatch revisions since the year. Brazil (41), Greater China(37), and Chile (14) saw most such actions. LatAm saw the highest downgrade potential since 2010 for consecutive three months with negative bias of more than 57%, with the region seeing compounding pressures stemming from regional political dynamics as well as the pandemic.


EM | COVID-19 / Oil-Related Rating Actions

35

Note: Data includes sovereigns. Data from Feb. 3, 2020 to June 30, 2020 and covers downgrades and CreditWatch Negative/negative outlooks. Source: S&P Global Ratings.

• Such rating actions were mostly among speculative-grade issuers.

• Negative outlooks. Brazil, Russia, Greater China, Colombia, and Poland saw the bulk of negative outlooks among speculative-grade issuers.

• The majority of negative actions across EMs were among speculative-grade issuers, ratings of which are typically more sensitive to systemic shocks than for their higher-rated peers. Economies such as Argentina, South Africa, Turkey, Brazil, Russia, and India had the highest speculative-grade contribution to these rating actions.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CreditWatch Negative Downgrade Negative Outlooks

Speculative-Grade Issuers Contribution To COVID-19/ Oil Related Rating Actions

(Total counts of issuers)


EM | COVID-19 / Oil-Related Rating Actions By Month

36

Sovereign. No EM sovereign downgrades in June among 16 EM countries covered.

Downgrades dominate rating actions given that prior negative outlooks are resolved. Though June downgrades for the region remain higher than before the outbreak in February, they were the lowest since March. Given that many outlook changes may have resulted in downgrades, indicative of a more stable though lower level of creditworthiness prevalent for the region.

Greater China and India had four issuers downgrades each. There were a total of 14 pandemic/oil related downgrades among EM 16 countries in June.

Malaysia has the most number of issuers (seven) placed on negative outlook in June 2020 among 16 EM countries.


0

20

40

60

80

100

120

140

Feb March April May June

Downgrade Downgrade + CW Change OL Change CreditWatch Negative

(Number of issuers)


Downgrade Potential | Regional Negative Bias

37

Latin America. Downgrade potential remained high in June, above 5- and 10-year averages.

EEMEA. Downgrade potential dropped in June below historical averages partially due to couple of downgrades in Russia in June, stabilizing at lower ratings levels.

Asia. Downgrade potential remains elevated among Emerging Asia (ex. China)

while Greater China

improves as we monitor the COVID-19 recovery, particularly as the impact on business and financial risks may materialize. Data as of June 30, 2020 and exclude sovereign. Source : S&P Global Ratings Research. Latin America: Argentina,

Brazil, Chile, Colombia, Mexico. Emerging Asia: India, Indonesia, Malaysia, Thailand, Philippines. EMEA: Poland, Russia, Saudi Arabia, South Africa, Turkey. Greater China --- China, Hong Kong, Macau, Taiwan and Red Chip companies.

17%

25% 26%

17%

12%

28%

35%

16%

37%

11%

57%

20%

0%

10%

20%

30%

40%

50%

60%

70%

Emerging Asia (ex.China)

EEMEA Latin America Greater China

10-Year Average 5-Year Average June 30, 2020


EM Downgrade Potential | By Sector

38

Automotive, Lodging, And Transportation Lead Downgrade Potential

Data as of June 30, 2020 and include sectors with more than five issuers only, and exclude sovereigns. Source: S&P Global Ratings Research. Latin America: Argentina, Brazil, Chile, Colombia, Mexico. Emerging Asia: India, Indonesia, Malaysia, Thailand, the Philippines. EMEA: Poland, Russia, Saudi Arabia, South Africa, Turkey. Greater China --- China, Hong Kong, Macau, Taiwan and Red Chip companies.

Echoing a similar trend in developed markets, automotive, lodging, and transportation sectors in EMs are facing the largest downgrade pressure.

Particularly intense revenue pressure (automotive, lodging, and transportation as well as retail).

Structural dislocation in the automotive sector ahead of the pandemic.

Collapse in travel impaired the airline industry.

0%

22%

23%

23%

24%

25%

27%

31%

33%

33%

35%

38%

44%

53%

64%

71%

75%

6%

22%

15%

29%

25%

25%

21%

24%

26%

23%

27%

26%

18%

23%

30%

27%

17%

0% 10% 20% 30% 40% 50% 60% 70% 80%

High technology (11)

Telecommunications (23)

Insurance (22)

Financial institutions (145)

Metals/mining/steel (33)

Oil & Gas (20)

Home/RE (66)

Consumer products (32)

Capital goods (12)

Health care (6)

Utilities (71)

Retail (8)

Forest (9)

CP&ES (19)

Transportation (14)

Media/entert (7)

Automotive (8)

5-Year Averages Current Negative Bias (June 30, 2020)


Rating Actions | -Angels

39

Debt volume includes subsidiaries and data excludes zero debt. Note: Red means speculative-grade rating. Data as of June 30, 2020; includes Sovereign and Greater China and Red Chips companies. Source: S&P Global Ratings Research.

Fallen Angels

Rating Date Issuer Country Sector Rating To Rating From

Debt Amount

(US $ Mil)

13-Jan-20 Empresa Distribuidora Y Comercializadora Norte S.A. Argentina Utility CCC+ B- $ 300

16-Mar-20 Banco Hipotecario S.A. Argentina Bank CCC B- $ 350

17-Mar-20 IRSA Inversiones y Representaciones S.A. (Cresud S.A.C.I.F. y A.) Argentina Homebuilders/Real Estate Co. CCC+ B- $ 431

19-Mar-20 PT MNC Investama Tbk. Indonesia Media & Entertainment CCC B- $ 231

6-Apr-20 Grupo Kaltex, S.A. de C.V. Mexico Consumer Products CCC B- $ 320

8-Apr-20 GCL New Energy Holdings Limited (GCL-Poly Energy Holdings Limited) Bermuda Utility CCC B- $ 500

8-Apr-20 Pearl Holding III Limited China Automotive CCC+ B- $ 175

9-Apr-20 PT Gajah Tunggal Tbk. Indonesia Automotive CCC+ B- $ 250

13-Apr-20 Compania de Transporte de Energia Electrica en Alta Tension TRANSENER S.A. Argentina Utility CCC+ B- $ 99

27-Apr-20 CAR Inc.

Cayman

Islands Transportation CCC B- $ 557

29-Apr-20 Aeropuertos Argentina 2000 S.A. Argentina Utility CC B- $ 400

30-Apr-20 PT Alam Sutera Realty Tbk. Indonesia Homebuilders/Real Estate Co. CCC+ B- $ 545

8-May-20 YPF S.A Argentina

Oil & Gas Exploration &

Production CCC+ B- $ 1,969

8-May-20 Pampa Energia S.A. Argentina Utility CCC+ B- $ 1,550

8-May-20

Transportadora de Gas del Sur S.A. (TGS) (Compania De Inversiones de Energia

S.A.) Argentina Utility CCC+ B- $ 500

8-May-20 Telecom Argentina S.A. Argentina Telecommunications CCC+ B- $ 400

8-May-20 Compania General de Combustibles S.A. Argentina

Oil & Gas Exploration &

Production CCC+ B- $ 300

8-May-20 CAPEX S.A. Argentina Utility CCC+ B- $ 300

8-May-20 AES Argentina Generacion S.A (AES Corp. (The)) Argentina Utility CCC+ B- $ 300

8-May-20 Banco De Galicia Y Buenos Aires S.A.U. Argentina Bank CCC+ B- $ 250

18-Jun-20 Oi S.A. Brazil Telecommunications CC B- $ 1,654

19-Jun-20 PT Modernland Realty Tbk. Indonesia Homebuilders/Real Estate Co. CCC B- $ 390

Rating Date Issuer Country Sector Rating To Rating From

Debt Amount

(US $ Million)

15-Jun-20 Embraer S.A. Brazil Aerospace & Defense BB+ BBB- $ 500

26-Jun-20 Axis Bank Ltd. India Bank BB+ BBB- $ 1,095


Rating Actions | List Of Defaulters YTD

40

Data as of July 13, 2020. Includes both rated and zero debt defaults. Includes sovereign, Greater China and Red Chip companies. Excludes five confidential issuers. D Default; SD Selective Default. Source: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Rating Date Issuer Country Sector To From Action type Debt amount (mil.)

14-Jan-20 Qinghai Provincial Investment Group Co. Ltd. China Metals, Mining & Steel D CCC- Downgrade $ 850

21-Jan-20 Panda Green Energy Group Ltd. Bermuda Utility SD CC Downgrade $ 350

21-Jan-20 Republic of Argentina Argentina Sovereign SD CCC- Downgrade $ 137,602

21-Feb-20 Tunghsu Group Co. Ltd., China High Technology SD CCC- Downgrade $ 390

27-Mar-20 Yida China Holdings Ltd. Cayman Islands Homebuilders/Real Estate Co. SD CC Downgrade $ 300

7-Apr-20 Republic of Argentina Argentina Sovereign SD CCC- Downgrade $ 139,092

10-Apr-20 Vestel Elektronik Sanayi Ve Ticaret A.S. Turkey High Technology SD CCC+ Downgrade $ -

14-Apr-20 NMC Health PLC U.A.E. Health care D CCC- Downgrade $ 400

24-Apr-20 Enjoy S.A. Chile Media & Entertainment D B- Downgrade $ 300

11-May-20 Yihua Enterprise (Group) Co. Ltd. China Consumer Products SD CCC Downgrade $ -

19-May-20 Aeropuertos Argentina 2000 S.A. Argentina Utility SD CC Downgrade $ 750

27-May-20 Latam Airlines Group S.A. Chile Transportation D CCC- Downgrade $ 1,800

2-Jun-20 Grupo Famsa, S.A.B. de C.V. Mexico Retail/Restaurants SD CCC- Downgrade $ 81

1-Jul-20 Grupo Aeromexico, S.A.B. de C.V. Mexico Transportation D B- Downgrade $ -

1-Jul-20 Grupo Posadas, S. A. B. de C. V. Mexico Media & Entertainment D CC Downgrade $ 400

8-Jul-20 PT Modernland Realty Tbk. Indonesia Homebuilders/Real Estate Co. SD CCC- Downgrade $ 390


Rating Actions | Fallen Angels And Potential Fallen Angels

41

Two fallen angels. Two fallen angels added in June 2020 among EMs: a Brazilian aerospace and defense, entity and Indian bank.

Potential fallen angels rise. Credit pressure continues to build, and the number of potentially fallen angels has reached 126, a new high as lockdowns and travel restrictions hit transportation hard. Greater China sees the largest potential fallen angels across EMs, all of which are corporate issuers (8), partially reflective of its larger share of issuers across EMs.

For more information, see The Potential Fallen Angels Tally Reaches A New High At 126 published June 18, 2020.

Greater China --- China, Hong Kong, Macau, Taiwan, and Red Chip companies. Data as of June 30, 2020. Source: S&P Global Ratings Research.

Potential fallen angels hit three-year high in EMs with two fallen angels in June

Lockdowns and travel restrictions hit nonfinancial sectors especially hard

0

5

2

57

31

10

67

12

3

6

2022

29

14

23

19

6 6

18

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fallen Angels Average Potential Fallen Angels

3

2

1

2 2

5 5

1 11

0

1

2

3

4

5

6

Brazil Chile China Colombia India Mexico Russia

Financial NonFinancial Sovereign

https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=45152670&From=SNP_CRS


Rating Actions | Weakest Links And Default Rates

42

• Weakest links. EMs saw weakest links at 32 issuers (nearly 16% of the speculative-grade rated population). Weakest links are

-a negative outlook or on CreditWatch with negative implications; they typically default at rate of 8x that of broader speculative-grade issuers.

• Rising default rates. Default rates were rising across EMs, while Asia default rate was volatile when trade tensions began to wear on credit conditions in late 2018 and 2019, and continued picking up after the spread of the pandemic.

• For more information, see More Than One-Quarter Of Speculative-Grade Issuers Are Weakest Links published May 14, 2020.

Data as of June 30, 2020. Outlook / CreditWatch as of June 30, 2020. Default Rates from CreditPro data as of May 31, 2020. Source: S&P Global Ratings Research, S&P Global Market Intelligence's CreditPro®.

EM Weakest Links Near Record Highs, Pointing To Likely Higher Default Rates

Default Rates Begin To Rise Across EMs

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

5

10

15

20

25

30

35

40

Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20

Weakest Links Count (lhs)

Weakest Link Share of Speculative-Grade Population (%) (rhs)

Asia (Ex China), 4.7%

EEMEA, 1.8%

Latin America, 2.1%

Emerging Markets (Ex China), 2.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2017 2018 2019 2020

Asia (Ex China) EEMEA Latin America Emerging Markets (Ex China)

https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=44894079&From=SNP_CRS


Related Research


44

EMs | Related ResearchSovereign Risk Indicators, July 14, 2020

COVID-19 Impact: Key Takeaways From Our Articles, July 13, 2020

Emerging Markets: The Long Road To A New Normal, July 13, 2020

Global Banks Outlook Midyear 2020: A Series Of Reports Look At The Profound Implications Of The COVID-19 Shock; July 9, 2020

Economic Research: The Global Economy Begins A Slow Mend As COVID-19 Eases Unevenly, July 1, 2020

Global Credit Conditions: The Shape Of Recovery: Uneven, Unequal, Uncharted, July 1, 2020

Banking Industry Country Risk Assessment Update: June 2020, June 26, 2020

Credit Conditions Emerging Markets: Slow Recovery, Prevalent Risks, June 30, 2020

Credit Conditions Asia-Pacific: China First To Recover, June 30, 2020

Economic Research: Latin American Economies Are Last In And Last Out Of The Pandemic, June 30, 2020

Economic Research: Asia-Pacific Losses Near $3 Trillion As Balance Sheet Recession Looms, June 25, 2020


45

Economics Global Paul F Gruenwald, New York, +1-212-438-1710, [email protected]

Asia-Pacific Shaun Roache, Singapore, +65-6597-6137, [email protected]

Emerging Markets Tatiana Lysenko, Paris, +33-1-4420-6748, [email protected]

Europe, Middle-East & Africa Sylvain Broyer, Frankfurt, +49-69-33-999-156, [email protected]

Latin America Elijah Oliveros-Rosen, New York, +1-212-438-2228, [email protected]

North America Beth Ann Bovino, New York, +1-212-438-1652, [email protected]

Research Global Alexandra Dimitrijevic, London, +44-20-7176-3128, [email protected]

Asia-Pacific Terence Chan, Melbourne, +61-3-9631-2174, [email protected]

Credit Market Research Sudeep Kesh, New York, +1-212-438-7982, [email protected]

Digital Research Strategy Gareth Williams, London, +44-20-7176-7226, [email protected]

Emerging Markets Jose Perez-Gorozpe, Mexico City, +52-55-5081-4442, [email protected]

Europe, Middle-East & Africa Paul Watters, London, +44-20-7176-3542, [email protected]

North America David Tesher, New York, +1-212-438-2618, [email protected]

Ratings Performance Analytics Nick Kraemer, New York, +1-212-438-1698, [email protected]

Research Support Nivritti Mishra, [email protected]

EMs | Contacts

mailto:[email protected]















46

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