Moody’s: Global sovereign credit outlook generally stable in 2015

SINGAPORE: Moody’s Investors Service says the global sovereign outlook is expected to be generally stable as a gradual global recovery will support credit quality.

Moody’s outlook for its rated sovereigns in South East Asia was also generally stable.

In its annual Global Sovereign Outlook Report titled, “2015 Outlook: Global Sovereigns”, Moody’s said that GDP growth rates for sovereigns globally were likely to remain lower than the levels seen before the global financial crisis in 2008- 2009.

The report identified four possible drivers of sovereign credit quality in 2015 which included the possibility of confidence shocks from the expected rise in US interest rates, especially in the case of a disorderly market reaction and the impact of lower than anticipated growth in China and the euro area.

Moody’s said, the overhang of geopolitical risk ( although this currently appeared unlikely to exert influence on credit profiles in Asia Pacific) and the ability and willingness of governments to undertake structural reform were also the possible drivers.

It said a disorderly market reaction to US rate hikes could pose a risk, to Malaysia ( A3 positive) and Thailand ( Baa1 stable), due to elevated household debt, and to the Philippines ( Baa3 positive), as a result of significant, although decreasing, share of government debt denominated in foreign currencies. — Bernama