Do Malaysia, South Africa Deserve Junk? Moody's Model Says Yes
- Malaysia, South Africa, Turkey, Kazakhstan perceived as junk
- Implied ratings based on CDS differ from official grades
Emerging Market Currencies Continue to Get Slammed
Six developing nations including Malaysia and South Africa deserve to follow Brazil into junk status, if credit-default-swaps traders are to be believed.
Two weeks after the Latin American country lost its investment grade at one of the three major ratings providers, CDS investors are punishing other emerging markets facing similar challenges, sending their implied ratings at least five levels below their official grades, according to data from Moody’s Corp. Malaysia is A3 at the company, though traders see it six levels lower at Ba3. South Africa, which is a Baa2, is viewed as a B1 borrower. Three Aa3 nations including China are perceived by the markets as deserving the lowest investment grade.