Moody's Talks - Emerging Markets Decoded

Corporate and sovereign default rates are decreasing as GDP growth, slowing inflation and monetary easing aid debt management. But EMs face a number of credit risks including potential US tariffs.Guest: Vittoria Zoli, Analyst, Credit Strategy & Guidance, Moody’s RatingsHost: Colin Ellis, Managing Director, Credit Strategy & Guidance, Moody’s RatingsRelated Research:Emerging Markets – Global: 2025 Outlook - Stable but fragile, with looming credit risks

In this joint Big Picture-Emerging Markets Decoded episode, our regional analysts highlight the key US policy areas to watch in Europe, Asia-Pacific and Latin America -- and discuss which economies and sectors could be at risk if policies were to dramatically change.Guests: Sarah Carlson, Senior Vice President, Sovereign Risk Group, Moody's Ratings; Gong Cheng, Managing Director, Credit Strategy, Moody's Ratings; Ariane Ortiz-Bollin, Vice President - Senior Credit Officer, Credit Strategy, Moody's RatingsHost: William Foster, Senior Vice President, Sovereign Risk Group, Moody's Ratings

In this conversation, John Walsh, an analyst at Moody's Ratings specializing in sovereign risk, dives into the evolving credit landscape of Sub-Saharan Africa. He discusses how institutional reforms and debt restructurings are improving credit ratings in countries like Côte d'Ivoire and Tanzania. Walsh highlights the potential of new hydrocarbon discoveries to enhance fiscal prospects while addressing the challenges of project financing and governance. The dialogue reveals a more optimistic outlook amid the region's common financial hurdles.

Risk exposure is highest for those directly involved in the region’s three main hotspots. But the knock-on economic effects of the tensions have the potential to hurt, or help, other APAC governments.Guest: Anushka Shah, Vice President - Senior Credit Officer, Sovereign Risk Group, Moody's RatingsHost: Vittoria Zoli, Analyst, Credit Strategy & Guidance, Moody's RatingsRelated Research:Sovereigns – Asia-Pacific: Geopolitical risk shapes creditworthiness for a host of governments 

India's large domestic market shields its companies from external shocks, whereas Indonesia's export-dependent commodity sector prompts government efforts to diversify growth.Guests: Rachel Chua, VP-Senior Analyst; Sweta Patodia, AVP-AnalystHost: Vittoria Zoli, Analyst, Credit Strategy & Guidance, Moody's RatingsRelated Research: Nonfinancial Companies – India and Indonesia: Credit quality will remain robust, even as earnings trajectory divergesNonfinancial Companies – Southeast Asia Dollar bond issuance will regain momentum when US interest rates begin to fallNonfinancial Companies – India: Offshore funding indispensable despite improving domestic liquidity

Challenges include the region’s reliance on fossil fuels to meet energy demand amid population growth, the companies’ weak financials and governments’ reliance on revenue from oil and gas producers.Guests: Roxana Munoz and Carolina Chimenti, both Vice President - Senior Analysts, Corporate Finance Group, Moody's RatingsHost: Vittoria Zoli, Analyst, Credit Strategy & Guidance, Moody's RatingsRelated research:Oil & Gas – Latin America & Caribbean: National oil companies struggle to reconcile governments' emission-reduction goals

Rate hikes in Turkiye have slowed inflation, and confidence in the country’s currency is increasing. The sovereign’s creditworthiness is improving as a result, along with that of Turkish companies.Guests: Kathrin Muehlbronner, Senior Vice President, Sovereign Risk Group, Moody’s Ratings; Iker Ballestero Barrutia, Analyst, Corporate Finance Group, Moody's RatingsHost: Vittoria Zoli, Analyst, Credit Strategy & Guidance, Moody's RatingsRelated Research:Moody's Ratings takes rating actions on eight Turkish corporates following upgrade of Turkiye sovereign ratingGovernment of Turkiye – B1 positive: Update following upgrade to B1, outlook remains positiveGovernment of Turkiye: Macro-financial monitor: CBRT tightening shows first results, but more is needed to moderate inflationMoody's Ratings upgrades Turkiye's ratings to B1, maintains positive outlookGovernment of Turkiye: Announced policy shift is credit positive but implementation comes with challenges

The opposition to proposed tax hikes impedes the government’s ability to increase revenue and reduce debt. Similar risks exist for other emerging market sovereigns too.Guest: David Rogovic, Vice President - Senior Credit Officer, Sovereign Risk Group, Moody’s RatingsHost: Scott Phillips, Head of Emerging Markets, Credit Strategy and Research, Moody’s RatingsRelated Research:Moody's Ratings downgrades Kenya's ratings to Caa1; maintains negative outlookGovernment of Kenya: Protests against Finance Bill's tax measures challenge government's fiscal consolidation strategyGovernment of Kenya: Kenya's IMF agreement bolsters short-term liquidity; fiscal consolidation is key to improving credit qualitySovereigns – Sub-Saharan Africa: 2024 Outlook - Negative on large debt maturities amid tight funding conditions  

We have revised our aggregate EM forecast up slightly to 3.9% for 2024-25 to reflect faster-than-expected growth in some of the largest EMs so far this year. Disinflation continues but is slowing.Speaker: Madhavi Bokil, Senior Vice President, Credit Strategy at Moody's RatingsHost: Vittoria Zoli, Analyst, Emerging Markets at Moody’s RatingsRelated Research:Emerging Markets – Global: GDP growth stays solid; disinflation slowsGlobal Macro Outlook 2024-25 (May 2024 update): G-20 momentum persists in 2024 with disinflation and cooler growth ahead

The creation of a coalition government following 29 May elections will likely support broad policy continuity and reforms, but the risk of government instability and ineffectiveness is significant.Guest: Aurelien Mali, Vice President-Senior Credit Officer, Sovereign Risk Group, Moody's RatingsHost: Scott Phillips, Associate Managing Director, Credit Strategy & Research, Moody's RatingsRelated research:Government of South Africa: National unity government will likely support broad policy continuity and the pursuit of economic reforms