Moody's Talks - Emerging Markets Decoded

In this episode of Moody’s Talks – Emerging Markets Decoded, Evan Wohlmann and Petter Bryman of the Sovereign team, and Olga Ulyanova of the Financial Institutions team join host Thaddeus Best to discuss the credit implications of rising tensions between Western countries and Russia over the latter’s military buildup on its border with Ukraine. Related content on Moodys.com (some content only available to registered users or subscribers): Sovereign – Russia & Ukraine: FAQ on heightened tensions and an outright conflict between Russia & UkraineBanks – Russia: Russian banks' proprietary investments lose value as geopolitical risks rattle marketsSovereigns – Europe: Energy ties raise risks, but credit impact from limited Russia-Ukraine conflict is lowBanking System Outlook Update – Russia: Outlook changed to stable as economic recovery supports asset quality, profitability

In this episode of Emerging Markets Decoded, Thaddeus Best from the Credit Strategy and Research team and Alexander Perjessy of the Sovereign team join host Ariane Ortiz-Bollin to discuss the credit implications of the decline in foreign direct investment flows across emerging markets. Plus, they discuss how growing global commitments to carbon transition will increase credit risks for hydrocarbon-reliant sovereigns.Related content on Moodys.com (some content only available to registered users or subscribers): Emerging Markets – Global FDI flows to emerging markets face structural headwinds, weighing on growth potentialSovereigns – Hydrocarbon exporters Strengthening global commitment to carbon transition increases longer-term credit risks

In this episode of Moody’s Talks – Emerging Markets Decoded, Ruosha Li from the Credit Strategy & Research team, Barbara Mattos from the Corporates team and Ana Rayes from the ESG team join host Thaddeus Best to discuss the gap in emerging markets’ climate financing needs and sources, as well as the rising social and environmental risks that deforestation poses to businesses in Brazil.Related content on Moodys.com (some content only available to registered users or subscribers): Sovereigns – Emerging markets - Concessional and market-based financing vastly undershoots climate-resilience funding needs Corporates – Latin America & Caribbean - Deforestation intensifies reputational risk for companies operating in Brazil

In this episode of Moody’s Talks – Emerging Markets Decoded, Lillian Li from the Credit Strategy & Research team and Lina Choi from the Corporates team join host Shirin Mohammadi to discuss how China’s common prosperity framework and new antitrust regulations will shape the credit outlook for the sovereign and businesses. Related content on Moodys.com (some content only available to registered users or subscribers): Government Policy – China - 'Common prosperity' agenda will create transition risks, with longer-term benefits if well implemented Technology Services – China - Antitrust regulations limit market-share expansion and reduce earnings growth

Aurelien Mali of the Sovereign team and Jorge Rodriguez-Valez of the Credit Strategy team discuss the outlook for Sub-Saharan African sovereigns and African banks as they grapple with the pandemic’s lasting effect on the region’s economies. Related content on Moodys.com (some content only available to registered users or subscribers): Sovereigns – Sub-Saharan Africa - 2022 outlook negative amid fragile recovery, persistent external risks and limited scope for adjustmentBanks – Africa - Problem loans will deteriorate moderately with limited impact on capital for most African banks

Atsi Sheth of the Credit Strategy & Research team discusses the outlook for global emerging markets, noting that while credit conditions will stabilize in 2022, high leverage, inflation and deteriorating financial conditions will increase risks for weaker countries and sectors. Related content on Moodys.com (some content only available to registered users or subscribers): Emerging Markets – Global 2022 Outlook – Multispeed recovery with stark differences across regions and sectors

Barbara Mattos of the Corporate Finance team and Farooq Khan of the Financial Institutions team discuss the mixed credit implications of rising commodity prices, rising inflation and political risk for companies and banks across Latin America.Related content on Moodys.com (some content only available to registered users or subscribers): Credit Conditions – Latin America & Caribbean: Credit quality will remain strong in region despite weaker growth prospectsCross-Sector – Argentina: Companies, utilities, sub-sovereigns struggle with inflation, weak growth in 2022Cross-Sector – Brazil: Strong balance sheets and liquidity support credit quality by 2022 amid macro risksCross-Sector – Chile: Corporate credit quality will hold firm in 2022 as economy emerges from pandemicCross-Sector – Mexico: Solid growth supports corporate income and debt reduction, easing leverage in 2022Cross-Sector – Peru: Companies regain footing through 2022, but investors will hesitate on policy risks

Gary Lau of the Corporate Finance team and Michael Taylor of the Credit Strategy and Research team discuss China Evergrande’s financial troubles and the credit implications for China’s property market, banks, government and potential spillovers to the global economy.Inside this episode:Gary Lau on the impact of the Evergrande situation on the broader property market in China (begins at 3:42)Michael Taylor discusses whether there could be a risk of deterioration of sovereign credit quality (begins at 7:17)Related content:Credit Conditions – China: Government actions on Evergrande likely to avoid financial, social instability but not preclude economic costsMacroeconomics – Global Investors face recurring market volatility and uncertainty in coming quartersRegional & Local Governments - China: Evergrande's credit distress and property sector slowdown will hurt RLG revenue, fiscal strengthProperty – China: China Property Focus: Refinancing risk builds up as tight credit conditions continue 

Samar Maziad of the Sovereign team discusses the cost effectiveness and advantages of social safety nets when responding to shocks. Plus, Jennifer Wong of the Sub-Sovereign team explains why emerging market regional and local governments face particularly high social risks.Inside this episode:Samar Maziad of the Sovereign team discusses the cost effectiveness and advantages of social safety nets when responding to shocks. (begins at 1:20)Jennifer Wong of the Sub-Sovereign team explains why emerging market regional and local governments face particularly high social risks. (begins at 7:27)Related content:Sovereigns – Emerging Markets: Social safety nets support credit quality by improving response to shocks, reducing social tensions - Well-targeted safety nets improve governments' response to shocks, mitigating the severity of economic disruption. The availability and effectiveness of these programs vary widely.Regional and local governments: Emerging markets Infrastructure gap, inequality, weak labor markets underpin exposure to social risks - Given the scale of these challenges and the limited fiscal flexibility of emerging market RLGs, social considerations will continue to weigh on credit profiles for many years.Sovereigns – Global Explanatory Comment: New scores depict varied and largely credit-negative impact of ESG factors - Considering exposure to environmental and social risk, governance strength, and financial and institutional buffers, ESG factors commonly have a negative impact on sovereign ratings. 

Madhavi Bokil of the Credit Strategy & Research team discusses inflation and financial stability risks in emerging markets. Plus, Nitish Bhojnagarwala and Ashraf Madani of the Financial Institutions team talk about the outlook for Islamic finance.Inside this episode:Madhavi Bokil of the Credit Strategy & Research team discusses inflation and financial stability risks in emerging markets. (begins at 1:36 mins)Nitish Bhojnagarwala and Ashraf Madani of the Financial Institutions team talk about the outlook for Islamic finance. (begins at 8:52 mins)Related content:Global Macro Outlook 2021-22 (August 2021 Update): Global growth rebound solidifies while risks broaden away from pandemic - We expect a robust rebound in economic growth despite risks from the delta variant. Inflation has surprised to the upside, but appears close to peak.Cross-Sector – Global: Characteristics of asset-based sukuk - This report provides an overview of the key characteristics of “asset-based” sukuk.Cross-sector - Islamic finance: Sukuk issuance will steady after five years of strong growth - Despite a solid first six months of the year, sukuk activity for 2021 will consolidate following 2020's record issuance.