Moody’s

In another unhappy turn for Pakistan, China’s president Xi Jinping postponed a state visit to the country on Saturday after three weeks of anti-government protests. Moody’s, one of the three big international credit rating agencies, warned this was a credit negative for the country because it would delay “Chinese aid and a host of deals between the countries”.

Such deals with China, Pakistan’s largest trading partner, are reported to be worth $34bn

It was not a downgrade but Moody’s decision to cut its outlook on Brazil’s sovereign rating was something of a blow for Latin America’s largest economy.

Given the problems that India has been having with its plunging rupee and widening fiscal deficit, is there any reason to think that India could be next in the firing line? Beyondbrics spoke to Atsi Sheth, a senior credit officer at Moody’s, to hear her views on Asia’s third largest economy. 

For a different perspective on Moody’s move this week to lower its outlook on Brazil’s sovereign rating, see this commentary from Joaquim Levy (pictured), chief executive officer of BRAM, the asset management arm of Bradesco, one of the country’s biggest home-grown banks. 

Moody’s has cut its outlook on Brazil’s rating from positive to stable.

Although it’s not a downgrade, it is a blow. For years Brazil’s upward growth – and improving credit rating – have been taken for granted. That’s no longer so. The move comes after Standard and Poor’s revised its outlook on Brazil from stable to negative in June

A safer bet than Greece

The Democratic Republic of Congo might not be on many fixed income investors’ radars at the moment, but that hasn’t stopped credit rating agency Moody’s assigning the country a B3 rating.

What’s the rationale? And where does that put DR Congo in the credit rating spectrum? 

Whether the global capital flows of the last few years are ended or just temporarily disrupted, here’s a reminder of what investors should be looking out for when it comes to emerging market companies’ debt.

According to Moody’s, it is sovereign risk, the strength of local financial markets and corporate governance. 

Credit rating agency Moody’s downgraded Slovenia on Tuesday to junk status, citing its weak banking system. After its being so often compared to Cyprus, you might think that’s fair enough.

But the downgrade leaves Slovenia in something of an odd position: it now has the widest range of ratings from the three main agencies out of any sovereign. Why the spread? 

If anyone was worried by Moody’s downgrade of BNDES and Caixa Econômica, the banks themselves seemed unruffled.

 

Moody’s Investors Service downgraded Egypt’s government bond rating to Caa1 from B3 on Thursday, moving the country to seven notches below investment grade – barely a month after its previous downgrade on February 12.

The downgrade takes Egypt, by Moody’s definition, from obligations “considered speculative and… subject to high credit risk” to those “judged to be of poor standing and… subject to very high credit risk.” 

Two weeks before Argentina has to submit to a US appeals court details of its offer to “holdout” creditors, Moody’s has taken the unusual step of downgrading the country’s foreign law bonds, citing increased default risk. 

Moody’s Investors Service has downgraded Egypt’s government bond rating to B3 from B2 (from five to six notches below investment grade) and kept it on review for a further downgrade.

The move follows fellow rating agency Fitch which downgraded the country on January 30 to B, one notch above Moody’s B3 level. S&P has Egypt on B-, the equivalent level to Moody’s.

Full statement from Moody’s follows. 

Credit rating agency Moody’s on Monday raised the Philippines’ debt rating to just a notch below investment grade, boosting expectations that the country, one of the world’s few investment bright spots, may finally win an investment grade rating next year.

The Moody’s upgrade aligns its rating with those of Standard & Poor’s and Fitch. 

Photo: Bloomberg

Credit rating agencies from China, Russia and the US are establishing a joint venture that they say will change the assessing of risk in global finance.

Dagong, a Chinese agency that has repeatedly downgraded the US, Egan-Jones, a small US agency, and Russia’s RusRating said they were answering calls for reform of the international credit rating system by linking forces to create the Universal Credit Rating Group. 

South Korean banks have won a vote of confidence from Moody’s Investors Service, which said they had become more resilient to foreign currency liquidity risks and high levels of household debt default.

It is welcome news for the Korean government as well, as concerns over the vulnerability of Korean banks sharply drove down the won’s value during the 2008-09 financial crisis, stoking a sense of vulnerability in Asia’s fourth-largest economy.