- S&P had 25 negative outlooks versus 8 positive by end-2015
- Pronounced outlook deterioration in Mideast, CIS, Africa
Sovereign downgrades are likely to accelerate this year after negative rating outlooks were more than triple the level of positive outlooks in 2015, according to Standard & Poor’s.
The balance between positive and negative outlooks, which indicate the likelihood of rating changes, worsened in all regions except the Asia Pacific, with the most pronounced deterioration in the Middle East, the Commonwealth of Independent States and Africa, S&P said in a report on Wednesday. Europe, Latin America and the Caribbean had a more moderate deterioration in outlook in 2015, it said.
The deterioration comes as China’s slowdown weighs on commodity prices and prospects for trade with the world’s second-biggest economy, while the cost of crude descends to decade lows amid a global oil glut. The slump has forced energy-producing countries such as Kazakhstan, Azerbaijan and Angola to devalue their currencies to shore up their economies and Commerzbank AG says Saudi Arabia’s currency peg is no longer sustainable. All four countries have negative outlooks at S&P.
While the negative view has dominated since early 2008, the trend had been improving since 2013 before it reversed in the second half of last year, with the number of those readings exceeding positive ones by 17, S&P said.