Moody’s issues warning about financing tightening in EMs

Moody'sFragile investor confidence, a slowing global economy and political risk in the Middle East has increased the risk of a tightening in financing conditions in certain emerging markets, including Mena, according to Moody’s Investor Services.  Most exposed are B-rated sovereigns, states the rating agency which ran a series of stress tests on emerging and frontier markets and potential financing pressure. "Unlike in 2018, when most emerging and frontier markets faced a sharp tightening in financing conditions, now, with major global central banks likely to maintain accommodative monetary policy, any shock is likely to be market-specific, triggered by external or domestic developments, and exacerbated by low policy credibility," said Marie Diron, a managing director in Moody's Sovereign Risk Group. The most exposed countries would see the sharpest deterioration in credit metrics when stressed due to weak debt affordability, reliance on foreign-currency borrowing and thin reserve coverage of external debt payments. Two Mena-based sovereigns appear in the list of the most exposed – Egypt (B2 stable) and Tunisia (B2 negative). ©2019 funds global mena

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