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S&P Report :Romania, Among Emerging Markets Most Exposed To Credit Squeeze

Romania ranks third, after Iceland and Lebanon, in a Standard & Poor's classification of the most vulnerable emerging markets if the global credit squeeze tightens, the rating agency said Monday.

"We believe Eastern European sovereigns are the most exposed, while Asian and Latin American sovereigns, with their trade surpluses and large foreign exchange reserves, are generally better insulated against the dearth of financial flows that may be in store if the global economy declines more sharply," said Standard & Poor's credit analyst Moritz Kraemer. Chile is the least vulnerable owing to its robust external and government balance sheet, followed by China, Venezuela, Trinidad-Tobago and Nigeria. S&P said sovereign downgrades and negative outlook actions have been concentrated among these most vulnerable sovereigns, whereas the least affected generally had positive rating actions, the report says. Domestic political issues were the usual cause for the exceptions to this pattern. In the S&P report, entitled “Why the Global Credit Squeeze could Hit European Emerging Market Sovereigns Harder than Others,” the agency’s specialists explain why they “believe Eastern European sovereigns are the most exposed, while Asian and Latin American sovereigns, with their trade surpluses and large foreign exchange reserves, are generally better insulated against the dearth of financial flows that may be in store if the global economy declines more sharply.” However, Standard&Poor’s indicated that the level of vulnerability of each state depends on its dependence on foreign capital inflows to finance external imbalances and avert balance-of-payments crises. Sursa: http://www.actmedia.ro

Tags: squeeze sovereigns credit exposed emerging report