Fixed Interests

Michele Napolitano, Head of Fitch’s Western Europe Sovereign Ratings, and Ed Parker, Head of EMEA Sovereign Ratings, discuss the impact of the Next Generation EU Fund on EU growth prospects and public finances.

Elevated debt levels in the wake of COVID-19 have exposed borrowers to global interest rate risks. Join Tony Stringer, Chief Operating Officer, Sovereigns and Brian Coulton, Chief Economist, as they discuss the outlook for US inflation, bond yields and the Fed.

How will China’s 14th Five-Year Plan impact its medium-term growth prospects? Will the Chinese yuan soon challenge the US dollar as one of the world’s leading global currencies? These are among the topics we will discuss on “China Perspectives,” a new Fitch Ratings podcast hosted by the firm’s lead sovereign analyst for China, Andrew Fennell. China Perspectives will feature candid discussions on the economic and credit developments most impacting China with experts from both within and outside of Fitch Ratings.As the first international credit rating agency to set up an office in in China in 1997, Fitch has unparalleled experience and market share in the region, with 21 active offices across the Asia-Pacific region. Subscribe to the new Fitch China Perspectives podcast, and stay tuned for our inaugural episode on the current state of onshore bond defaults, out this April on your podcast app.

Ed Parker, Head of Fitch’s EMEA Sovereign Ratings, and Tony Stringer, a Managing Director in the Sovereigns Group, discuss the risks facing emerging and frontier markets from Fed tapering its quantitative easing programme and rising US bond yields.

Shelly Shetty, Managing Director, Americas Sovereigns, and Richard Francis, Senior Director & Primary Analyst on Colombia, discuss Colombia’s economy, the recently unveiled tax reform, and key factors to resolve the country’s negative outlook.

Paul Gamble, Head of Emerging Europe Sovereigns and Douglas Winslow, Director, discuss Fitch’s the revision of the Outlook on Turkey’s ratings to Stable from Negative and the recent evolution of economic policy.

Jan Friederich, Head of Middle East & Africa Sovereigns and Krisjanis Krustins, Director covering GCC sovereign ratings, discuss GCC ratings in light of higher oil prices, political developments and reform announcements.

In this podcast, Shelly Shetty, Managing Director in the Sovereigns group, and Charles Seville, Senior Director in the Sovereign group, discuss what the Biden administration means for U.S. economic policy and the U.S. sovereign rating outlook.

Cote d’Ivoire recently became the first Sub-Saharan African sovereign to access international markets since the start of the pandemic crisis. Jan Friederich, Head of Middle East & Africa Sovereign Ratings, and James McCormack, Global Head of Sovereigns, discuss SSA’s growth prospects for 2021 and the financing pressures in the region.

In the latest Fixed Interests, Shelly Shetty, Managing Director of Sovereigns, and Todd Martinez, Director of Sovereigns, discuss the future economic prospects and challenges in Argentina and Ecuador following their respective debt restructurings in September. They compare and contrast the two restructurings and examine Fitch’s upgrade of Argentina’s ratings to CCC and Ecuador to B- with stable outlook, and the risk factors to monitor in these countries in 2021.

Jan Friederich, Head of Middle East & Africa Sovereign Rating, and Mahmoud Harb, Director, discuss the rationale for the recent downgrade of Morocco’s ratings to BB+ with Stable Outlook, the pandemic impact and prospects for the country.

Amidst the global pandemic, Korea is outperforming its peers as a result of virus containment and rebounding exports. Stephen Schwartz and Jeremy Zook of APAC Sovereign Ratings discuss Korea’s economic and trade outlook, policies, and key risks.

In this latest podcast, Shelly Shetty, Managing Director of Sovereigns, and Carlos Morales, Director of Latin America Sovereigns, discuss sovereign trends in Central America. They delve into the challenges Central America are facing including fiscal pressures, headwinds from the U.S. and the global recession, spread of the coronavirus, downgrades and Negative outlooks ratings, and more. Find out which countries can be more resilient and what’s ahead for the region.

Paul Gamble, Head of Emerging Europe Sovereign Ratings, and Douglas Winslow, Director and lead analyst for Turkey, discuss Fitch’s recent revision of the Outlook on Turkey’s sovereign rating to Negative from Stable.

Stephen Schwartz, Head of APAC Sovereign Ratings and Thomas Rookmaaker, Director and Lead Analyst for Indonesia, discuss the economic impact of the Coronavirus in Indonesia, the fiscal and monetary policy responses and long term growth prospect.

The pandemic has had a heavy impact on SSA ratings. Jan Friederich, Head of Middle East & Africa Sovereign Rating, and Jermaine Leonard, Director, discuss the impact on sovereign ratings, the oil price shock, financing pressures and the G20 DSSI.

Climate change is a huge topic of political, social and financial market discourse. Ed Parker, Head of Fitch’s EMEA Sovereign Ratings, and Tony Stringer, a Managing Director in the Sovereigns Group, discuss the main types of climate change risks, the uncertainties involved and the impact on sovereign ratings.

In the latest edition of Fixed Interests Shelly Shetty, Managing Director, and Kelli Bissett-Tom, Director and primary analyst for Peru, discuss the recent downgrade of Peru’s Local Currency IDR and its equalization with the Foreign Currency IDR which was also affirmed with a Stable Outlook. They examine the challenges ahead for Peru’s economic and fiscal profiles amid the coronavirus pandemic and an impending election cycle.

Nigeria faces significant challenges from the pandemic shock. Jan Friederich, Head of Middle East & Africa Sovereign Rating, and Mahmoud Harb, Director, discuss ongoing pressures on Nigeria’s external finances, its funding plan and growth outlook.

Forecasts cut again, but global economy close to bottoming out. Tony Stringer, Chief Operating Officer, Sovereigns and Brian Coulton, Chief Economist, discuss Fitch’s Global Economic Outlook - Crisis Update, May 2020

The GCC has been severely impacted by the global coronavirus pandemic. In this podcast, Jan Friederich, Head of Middle East and Africa Sovereign Ratings, and Krisjanis Krustins, Director and GCC Sovereigns analyst, discuss how sharply lower oil prices and the coronavirus crisis affect GCC sovereign ratings and currency pegs.

Shelly Shetty, Co-Head of Sovereigns-Americas, and Charles Seville, Senior Director, Americas Sovereigns, discuss Mexico’s rating downgrade, our main rationale behind our rating action and our overall views on how Mexico is placed to face the current difficult circumstances of global recession, including the contraction of the U.S., lower oil prices, coronavirus impact and other potential hits. What are the main drivers of Mexico’s economic recession? How will Mexico respond to the external shocks, and what’s ahead?

The lockdown on Wuhan has been lifted and China’s economy is recovering gradually. Stephen Schwartz and Andrew Fennell of APAC Sovereign Ratings, discuss China’s economic prospects, the course of policies, and implications for the sovereign rating.

Global GDP is collapsing as the COVID-19 crisis escalates rapidly. Tony Stringer, Chief Operating Officer, Sovereigns and Brian Coulton, Chief Economist, discuss Fitch’s latest Global Economic Outlook - Crisis Update.

With the coronavirus crisis taking an extraordinarily heavy toll on the world economy, Tony Stringer, Chief Operating Officer, Sovereigns and Brian Coulton, Chief Economist, discuss the latest Global Economic Outlook forecasts and downside scenarios.

In the latest edition of Fixed Interests, Michele Napolitano, Head of the Western Europe team, and Alex Muscatelli, from the Western Europe team and Primary Analyst for Ireland, discuss the implications of Ireland’s recent election for our analysis, and the outcome of our recent rating review of Ireland.

What are the economic and political implications of the recent social protests in Chile and Colombia, and what does the future hold? In the latest edition of Fixed Interests, Shelly Shetty, Co-Head of Sovereigns-Americas and Richard Francis, Director of Sovereign Ratings and Primary Analyst for Colombia and Chile, discuss how the aftershocks of the recent social unrest impacted the growth outlook and political profile of each of the countries. The overall impact was much more profound in Chile, leading Fitch to significantly revise its previous baseline growth and fiscal forecasts. In contrast, the impact on Colombia’s growth was relatively benign but there were some negative fiscal implications, an area where Fitch already had concerns given the rise in debt to GDP over the past five years. Despite the recent fall in the intensity of the protests, risks and uncertainties remain.

Sovereigns in the Commonwealth of Independent States (CIS) and Black Sea Region have experienced positive rating momentum recently, with four upgrades in 2019. Paul Gamble, Head of Emerging Europe Sovereign Ratings, and Erich Arispe, Senior Director on the Sovereign team, discuss the factors behind the improvement in the regions rating, and why Fitch believes that further upgrades may be tougher to achieve.

Asia’s Frontier Markets have great potential, but are also prone to external financing pressures. Stephen Schwartz, Head of Asia-Pacific Sovereign Ratings, moderates a discussion with Sagarika Chandra and Jeremy Zook, Associate Directors on the Sovereigns team, to discuss the ratings outlook for Sri Lanka, Pakistan and Vietnam. Sagarika explains the rationale for the recent revision of Sri Lanka’s outlook to negative, in contrast to Vietnam’s positive outlook. Jeremy discusses progress being made to strengthen Pakistan’s public and external finances, and what it would take for Pakistan’s rating to move higher.

The relative stability of the service sector - which accounts for 70% of GDP in the advanced economies – should help global growth to stabilise next year after a sharp leg down in 2019. Manufacturing has been hit much harder by the trade war, the related decline in business investment and the broader emerging market slowdown and we do not expect any rebound, even if signs are emerging that the downturn maybe starting to ease. Service sector output is much more closely tied to consumer spending, where tight labour markets and solid household income growth are supporting steady growth.

Demographic trends such as declining or rapidly expanding populations, a bulging youth cohort or pronounced ageing can create risks to sovereign creditworthiness. Key channels of impact include stagnant potential GDP growth, unsustainable pension systems and public debt, and risks to social and political stability. Demographic forces are already affecting some sovereign ratings and Fitch Ratings believes they are likely to become a more important driver over the medium term.

What are the implications of Argentina’s most recent presidential election, and how will it affect the nation’s current economic uncertainty? In the latest edition of Fixed Interests, Shelly Shetty, Co-Head of Sovereigns-Americas and Todd Martinez, Primary Analyst for Argentina, discuss President-elect Alberto Fernandez’s potential fiscal policies to help stem inflation, the pending renegotiation of the IMF program, and necessary debt restructuring to avoid default and establish a sustainable financial position.

World growth forecasts have been cut across the board following the escalation in the US-China trade war in August. We now expect world growth in 2020 to fall to 2.5% , the lowest rate since 2012. Trade policy disruptions will adversely affect exports, manufacturing and business investment and there are limits as to how effective monetary policy easing will be in softening the blow.

James McCormack, Head of Sovereign Ratings and Stephen Schwartz, Head of Asia-Pacific Sovereign Ratings, provide a preview of key issues that will be discussed at Fitch’s Global Sovereign Conferences taking place in Asia, Europe and the U.S. during the weeks of September 9th and 16th. Issues include the growth implications of the China-US trade war, and policy space across Asia for stimulus, if required, in light of risks to the growth outlook. Check out the events page on Fitchratings.com for more information and conference registration.

Jan Friederich, Head of Middle East and African Sovereign Ratings, explains the key drivers behind the decision to revise the outlook on South Africa to Negative and affirm the rating at ‘BB+’ in a conversation with Stephen Schwartz, Senior Director, Sovereign Ratings. They also discuss South Africa’s economic and political outlook from a credit perspective.

As a result of political polarization, fiscal constraints, and rising tensions with the U.S. over immigration policy, Central America faces political instability; currently, three out of five countries in the region have negative outlooks. In the latest edition of Fixed Interests, Shelly Shetty, co-Head of Latin American Sovereigns, and Carlos Morales, Director of Sovereign Ratings, discuss the latest trends in Central America Sovereigns as well as the more common themes behind some of the recent negative rating actions.

Michele Napolitano, Head of Western Europe Sovereigns, and Alex Muscatelli, Director, discuss the failure of Pedro Sanchez to win a confidence vote in the Spanish parliament on 25 July. This could delay fiscal consolidation measures scheduled for 2020, although this would not significantly change our debt-to-GDP projections. The increase in political instability in recent years has not damaged the economic recovery that has supported Spain’s fiscal adjustment. However, a cyclical slowdown will lessen the role of GDP growth in deficit reduction.

Stephen Schwartz, Head of Asia-Pacific Sovereign Ratings, and Thomas Rookmaaker, Director and Lead Analyst for India of Sovereigns Ratings, discuss India’s fiscal and growth outlook, along with the key drivers of the sovereign rating.

Tony Stringer, Managing Director, Global Sovereigns and Ed Parker, Head of EMEA Sovereign Ratings discuss Sub-Saharan African (SSA) debt, noting government debt/GDP has risen steeply in SSA, with the median of 19 Fitch-rated sovereigns doubling since 2012 to 56% at end-2018. Fitch believes that SSA sovereigns have used some of the fiscal space afforded by the Highly Indebted Poor Countries initiative to boost investment, GDP growth and human development.

Tony Stringer, Managing Director, Global Sovereigns and Brian Coulton, Chief Economist, say threats to the global growth outlook from trade protectionism have become much more significant in recent months. The breakdown of US-China trade negotiations, the recent use of a US tariff threat to pressure Mexico to change migration policies, and the rising chance of a no-deal Brexit all raise the possibility of disruptions to global trade that could have a much bigger impact on the world economy than anything seen over the course of 2018.

Shelly Shetty and Charles Seville, Co-Heads of Sovereigns Ratings for the Americas, discuss the recent downgrade of Mexico's credit ratings. Key drivers for the rating action include liability of Pemex's deteriorating credit profile, poor economic growth performance exacerbated by trade tensions, and domestic policy uncertainty from the new administration.

Shelly Shetty, Co-head of Sovereigns—Americas, and Todd Martinez, Primary Analyst for Argentina, discuss the Negative Rating Outlook for the country against a backdrop of continuing high inflation, economic contraction, as well as a competitive presidential election in October.​

Jan Friederich, Head of Middle East & Africa Sovereign Ratings, and Krisjanis Krustins, Director focusing on GCC sovereigns, discuss the fiscal trends in the region, the risks stemming from the oil market, the credibility and direction of reforms and the outlook for sovereign ratings.

In the latest Fixed Interests Podcast,Tony Stringer, Managing Director, Global Sovereigns and Brian Coulton, Chief Economist, discuss the Global Economic Outlook for 2019, noting global growth prospects have deteriorated significantly since December 2018.

Shelly Shetty, Co-head of Sovereigns—Americas, and Richard Francis, Primary Fitch Analyst for Colombia, discuss the fiscal and growth challenges for Colombia and how the new government is trying to tackle those issues.​

Tony Stringer Managing Director, Global Sovereigns and Erich Arispe, Director, Fitch Ratings, discuss the Positive Outlook for Russia which reflects continued progress in strengthening the economic policy framework underpinned by a more flexible exchange rate, a strong commitment to inflation-targeting and a prudent fiscal strategy. This policy mix has increased the economy's resilience to shocks and helped preserve macroeconomic and financial stability despite the heightened sanctions' risk

Public finances in several developed markets look exposed when the next recession eventually strikes, with potential negative consequences for some sovereign ratings.

Persistently high fiscal deficits leading to rising debt burden and high government financing needs has led Fitch to downgrade Costa Rica. Charles Seville, Head of North America Sovereigns, and Carlos Morales, Director, Sovereigns, discuss Costa Rica in more detail, exploring the reasons behind the downgrade and how this negative outlook may be resolved.

Tune into our latest Fixed Interest podcast with Brian Coulton, Chief Economist and Tony Stringer, COO, Global Sovereigns Group, who discuss what's in store for the global economy in 2019. For more content providing in-depth insight into credit in 2019, including reports, videos and webinars visit our dedicated Credit Outlook page https://your.fitchratings.com/outlooks-2019.html

Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook, with the US-China trade battle prompting us to downgrade our 2019 global GDP forecast, says Fitch Ratings in its new Global Economic Outlook (GEO).