Ratings agency Moody’s has painted a mixed picture for credit risk in the Mena region and warned that policy decisions could play a key role in the effect of these risks on the respective financial markets in the region.
In its 2019 Outlook on Emerging Markets report, Moody’s states that emerging markets as a whole will face more challenging credit conditions in 2019 due to slower global growth, rising interest rates, trade protectionism and geopolitical tensions.
The agency rates the credit outlook as negative for Turkey and parts of Africa and mixed for the Middle East. Moody’s also states that policy responses to the financial, trade and geopolitical challenges could be a key determinant of future credit conditions.
“Turkey faces mounting institutional challenges and policy uncertainty, and there are also ongoing hurdles to reform in parts of the Gulf Cooperation Council,” says Moody’s Managing Director Atsi Sheth.
Issuers of bonds in countries with domestic macroeconomic or political challenges are more vulnerable to international investor risk aversion, states Moody’s, while the countries with growing domestic markets and “multiple instruments in their policy toolboxes” are likely to be more resilient.
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