James Leaton of the ESG team discusses carbon transition risks for emerging markets. Plus, Nishad Majmudar of the Sovereign and Credit Strategy teams and Jack Yuan of the Sub-Sovereign team discuss China’s bold plans to reach carbon neutrality by 2060. Related content:ESG – Global: Prevalence of ESG factors in public-sector rating actions rose in 2020 - We reviewed nearly 5,600 credit rating action announcements that we published in 2020, finding that the frequency of ESG considerations increased significantly from the prior year.Environmental Risks – China: Path to net-zero emissions points to bumpy transition for fossil fuel-driven sectors - Global momentum and domestic initiatives behind reducing carbon dioxide emissions to net zero by midcentury will have credit implications for Chinese entities across sectors.Regional & Local Governments – China: Carbon transition will be uneven, with credit risks for provinces in northern - Provinces with large legacy carbon-emitting industries or exposure to coal mining and weaker fiscal and state-owned enterprise profiles will have most difficulty bearing cost of transition.

Inside this episodeAlka Anbarasu and Mik Kabeya of the Financial Institutions team discuss the mostly negative outlook for emerging market banking systems, while Rodrigo Marimon, also of the Financial Institutions team, explains how sticky deposit bases in Mexico will enable banks there to benefit from monetary tightening.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Banks – Mexico Stabilizing interest rates and economic recovery will support profit A combination of factors bodes well for profit, including stabilizing interest rates and a recovering economy, along with loan growth, cheap funding, and declining costs and provisions.Global Emerging Market Banks Chartbook This report outlines the key trends and ratings drivers for emerging market banks.Banks – Emerging Markets Asset risk trends will diverge as new waves of virus blight recovery of some markets Nigeria, Turkey and Colombia will be hit hardest; China, India and Chile will be most resilient

Inside this episodeMarie Diron of the Sovereign group discusses the outlook for non-investment-grade sovereign ratings and how they fared during the pandemic. Plus, Anushka Shah, also of the Sovereign group, examines the credit implications of lagging vaccination rates in the Asia-Pacific region. Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Non-Investment-Grade Sovereigns: Global Weak and delayed economic recovery will make it more challenging to restore fiscal and liquidity positions, 22 June 2021 The report highlights key rating trends for non-investment-grade sovereigns across the globe.Sovereigns – Asia Pacific: Lagging vaccinations pose risks to domestic demand; exports provide buffer for some, 23 June 2021 Infections have recently spiked in a number of economies where vaccination rates are low, but trade is providing a strong support to output in the more export-oriented economies.

Inside this episodeElisa Parisi-Capone from the Sovereigns team and Peter Mushangwe from the Financial Institutions team join host Thaddeus Best to discuss how liquidity risks have risen for Sub-Saharan sovereigns with less-developed domestic capital markets, and the pandemic-induced asset quality deterioration of some of the largest regional banks. Also, Lisa Jaeger discusses one sector in the region experiencing growth: telecom companies.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Telecommunications – Africa African telecoms to benefit from strong growth but face increasing sovereign risks Growth of the telecom sector in Africa will be strong because most markets remain underpenetrated. But deteriorating sovereign environments increase risks.Banks - Africa Pandemic takes toll on Africa's largest banks but profitability will remain resilient Problem loans have soared at African banks as the pandemic brought widespread economic disruption to the continent.Sovereigns – Africa Varied availability of domestic funding sources in Africa drives liquidity risks Following a surge in gross borrowing requirements during the pandemic, sovereigns with domestic funding constraints face higher exposure to a potential tightening in financial conditions.

Inside this EpisodeErick Rodriguez of the Corporates team discusses how most companies and public finance projects in Latin America managed to maintain adequate liquidity levels despite the depth of their recessions. Meanwhile, Samar Maziad of the Sovereign group dives deeper into Brazil, the region’s largest economy, to answer the most frequently asked investor questions.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Cross-Sector – Argentina: Tight local market conditions keep corporate liquidity risk high in 2021-22 Despite liability management and the completion of some infrastructure spending, Argentine corporate refinancing risk remains high for the $7.9 billion in debt maturing in 2021-22.Cross-Sector – Brazil: Liability management prevents higher liquidity risk through 2022 Much of the short-term debt that Brazilian companies issued during the pandemic comes due through 2022, modestly increasing overall liquidity risk and making liability management crucial.Cross-Sector – Chile: Strong commodity prices point to solid performance even as liquidity tightens Liquidity risk increased for Chile's 17 rated non-financial companies, utilities and infrastructure issuers, but most will have enough liquidity to meet their obligations through late 2022.Cross-Sector – Mexico: Low liquidity risk and post-pandemic growth will benefit most companies Mexican companies will generally have enough cash on hand, free cash flow, and available committed credit facilities to cover their debt, operating expenses and capital spending through 2022.Cross-Sector – Peru: Corporate liquidity holds as improving economy offers some promise for 2021-22 We have seen little change in the number of rated Peruvian non-financial and infrastructure companies; nine of the 17 companies in our annual study have low or medium liquidity risk today.Government of Brazil: FAQ on sovereign credit challenges amid slow pace of vaccinations against the coronavirus Recent developments in Brazil (Ba2 stable) remain broadly in line with our baseline scenario. We now expect Brazil’s economy to rebound sharply from last year’s moderate contraction as the spread of the coronavirus slows in the second half of the year. 

Inside this episodeDeborah Tan of the Credit Strategy & Research team explains the effectiveness and risks of quantitative easing in emerging markets, while Matt Robinson of the Sovereign group discusses the uneven economic recovery ahead for emerging markets, common factors affecting lower-rated sovereigns and key metrics and trends to follow in 2022 and beyond.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Macroeconomics – Emerging Markets: Quantitative easing programs are largely positive, but risks vary across economies Programs launched at the height of the pandemic have helped stabilize domestic bond markets, provide market liquidity, ease the impact of capital outflows and lower long-term bond yields.Emerging Markets – Global 2021 Summit: Recovery uneven across emerging market countries and lagging advanced economies Our virtual summit highlighted the widely divergent recovery we expect across emerging markets, with growth slowing as the pandemic's toll casts a long shadow over the global economy.Emerging Markets – Global 2021 Summit: ESG risks are greater for emerging markets than advanced, but vary widely Our virtual summit highlighted the heightened ESG risks for emerging markets, with strong governance an important tool to address social and environmental challenges.Emerging Markets – Global 2021 Summit: Energy transition risks and strategies vary among different oil-producing regions Oil producers in the GCC have made greater carbon-transition inroads than those in Latin America, whose debts and government revenue obligations are preventing greater efforts to evolve.

Welcome to Emerging Markets Decoded! Co-hosted by Ariane Ortiz-Bollin and Thaddeus Best of the Global Emerging Markets team, Emerging Markets Decoded delves into the latest developments impacting the credit environment for emerging market issuers across asset classes. In each episode, Moody’s analysts join Ariane and Thaddeus to explore the ramifications of global macroeconomic and financial market developments, environmental, social and governance risks and other challenges for emerging economies. 

Inside this episodeAlexander Perjessy and Thaddeus Best of the Sovereign team discuss our forecasts for a protracted recovery of Gulf Cooperation Council economies this year, and the unique availability of these governments to tap into sovereign wealth fund assets to plug their fiscal deficits.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Sovereigns – Gulf Cooperation Council 2021 outlook negative as pandemic curbs fiscal strength, adds to labour challenges The pandemic will dampen oil revenue, extending the deterioration in fiscal strength experienced in 2020, while constraining government spending and slowing the economic recovery.Sovereign and Supranational — Sovereigns – Gulf Cooperation Council: Saudi Arabia, Oman most exposed to diminishing fiscal uplift from SWFs  The coronavirus-driven decline in oil demand and prices has significantly increased gross financing requirements for Gulf Cooperation Council (GCC).

Inside this episodeMarie Diron and Daniela Re Fraschini from the Sovereign team discuss our new environmental, social and governance (ESG) sovereign scores and how sustainability issues contribute to credit risks for emerging market countries.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.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.CROSS-SECTOR RATING METHODOLOGY: General Principles for Assessing Environmental, Social and Governance Risks Methodology This methodology describes our General Principles for Assessing Environmental, Social and Governance Risks.

Inside this episodeJaime Reusche and Gabriel Torres of the Sovereign team discuss our negative credit outlook on Latin American sovereigns. Although we expect the region to broadly return to GDP growth in 2021, economic revival will take time and pressure on governments to boost spending on social programs will build in the wake of the coronavirus crisis.Related ContentMoody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.Sovereigns – Latin America & Caribbean: 2021 outlook negative as social pressures rise amid subdued recovery from pandemic Subpar medium-term growth prospects and rising social pressures will challenge governments’ ability to restore lost fiscal space, pressuring creditworthiness in the region. As LatAm sovereigns emerge from the pandemic with higher debt and interest burdens, we expect fiscal strength to weaken.