Romania, One Of The Most Vulnerable Countries To Econ CrisisPublish date: 16-12-2008
Moody's included Romania among the countries most vulnerable to the effects of the current economic crisis, which are more likely to face pressures on the ratings, the ratings agency said in a report Monday.
"Moody's Global Sovereign Group identified a list of 'High Vigilance Countries,' i.e. countries that appear vulnerable to the current crisis and are more likely to face rating pressures. Among these are Hungary, Croatia, Romania, Bulgaria, Korea, Kazakhstan, Turkey, Ukraine, South Africa, Pakistan, and the Baltic countries," according to a Moody's press release.
Moody's has already started taking isolated rating actions, like on Ecuador, Pakistan, Jamaica, Hungary, Estonia, Latvia, and Lithuania, the press release stated.
When Moody's published its "2008 Mid-Year Outlooks for Global CDOs/Derivatives" in September 2008, its central macroeconomic scenario was assuming strong growth in emerging countries. The vast majority of sovereign credits were then showing a stable outlook, with less than 2% of the issuers placed under review for possible downgrade or associated with a negative outlook.
Since then, the financial crisis has started to affect the prospects for emerging market economies, and Moody's has published updated macroeconomic scenarios where emerging markets growth prospects have been revised downwards
Based on these considerations, Moody's has revised its Emerging Markets CDOs collateral performance outlook to Negative from Stable, and expects rating implications to be Negative on Emerging Markets CDOs tranches. CDOs (collateralized debt obligations) are investment-grade securities backed by revenues from loans.
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