Rating upgrades of emerging market sovereigns continue to exceed downgrades for the fifth straight year, despite the dislocations in the money markets of industrialised nations, according to an article by Standard & Poor’s Ratings Services, titled, ?Emerging Market Sovereigns Have Deeper Roots To Withstand Today’s Gales.?
Sovereign upgrades should continue to exceed downgrades in the near term, as positive outlooks on ratings of emerging market sovereigns outnumber negative outlooks, noted Standard & Poor’s credit analyst John B Chambers, chairman of the Sovereign Ratings Committee.
According to the report, the improving trends of emerging markets reflect improved fundamentals, with 23 out of the 38 surveyed seeing growth accelerate or exceed historical averages during this five-year period.
Twenty-seven have narrowed their general government fiscal deficits or have posted surpluses.
Thirty-two have trimmed their debt burden. Fifteen are running current account surpluses. Twenty-four have bolstered their external liquidity position. Thirty-four have improved their international investment position.
?This has also been a period of strong global growth, rising commodity prices, ample cross-border capital flows, and low real interest rates–an environment particularly favorable to most emerging market sovereigns,? said Chambers.
?Nonetheless, policymakers of most emerging market governments have taken advantage of this benign environment to improve their government’s capacity to service debt during more difficult times.?