Fixed Interests

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.