Another day, another sovereign downgrade, it seems. But is there a regional basis to recent downgrade activity?
In short, yes. Eastern Europe has low but rising credit ratings, while those of the eurozone are high but falling. Northern European sovereigns – in or out of the eurozone – retain their Aaa ratings. Indeed, geography seems more correlated with credit rating levels than inclusion in the eurozone.
Eastern Europe has done relatively well in the past two years, enjoying small upgrades while the eurozone has suffered sharp downgrades. Absolute levels have remained distinct, though, until recently (click the “absolute” radio button to see levels). Now Greece, Portugal and Ireland are between blue and purple, matching levels found in eastern Europe.