Managing Director of Credit Strategy at Moody Investor Service, Atsi Sheth, says credit default rates among emerging markets and advanced economies are lower than levels seen during the 2008 global financial crisis.
She say while the global economy is in a recovery phase from the economic impact of COVID-19, the rate of recovery will be varied across different regions.
Earlier, the virtual Moodys Emerging Market Summit heard that South Africa, Brazil and Russia were showing slower signs of recovery compared to their other Brics partners.
“Extreme credit deterioration can lead to default rates. And again, going back to the global financial crisis, we saw that both emerging markets and advanced economies had default rates that peaked at about 13% of speculative grade universe. So, 13% of lower-rated companies defaulted during that crisis. During this one and partly due to that recovery in financial conditions that we talked about default rates peaked at much lower levels, between 7 and 8% for emerging markets and advanced markets.”
Despite some signs of improvement, credit stress indicators remain elevated across emerging market sovereigns and non-financial corporates. Discover what credit challenges global emerging markets face in our report: https://t.co/ilgS37Przi#MoodysEM pic.twitter.com/78mTCQp7Yv
— Moody’s Investors Service (@MoodysInvSvc) May 24, 2021
