EM Triple Shot | Broyer on BBC | Look Forward: Private Debt | Corporate Defaults | Upcoming Credit and Risk Symposium

Welcome to the latest edition of Essential Economics. This week we lead off with a triple shot of emerging markets featuring: our monthly macro-credit chart pack, a ratings performance update and a look at how banks are coping with tighter global financing conditions. Next, Sylvain Broyer appeared on the BBC’s World Business Report to discuss UK inflation. The latest installment of our flagship cross-divisional Look Forward journal takes a deep dive into private markets. Credit Researcher Nicole Serino and team report that, driven by distressed exchanges, the global corporate default tally in March rose to the highest year-to-date figure since 2009. Finally, we tee up out my appearance at an upcoming credit and risk symposium sponsored by S&P Market Intelligence.

EM Monthly Chart Pack: Bright Spots, Cross Currents

The emerging markets (EM) team slightly upgraded their growth projections and now expect average growth across EMs to reach 4.3% in 2023 (up 30 basis points from our November forecast). It is not just core, but also food inflation remains sticky.

Downgrades in March illustrate that EM issuers have not fully recovered from shocks stemming from the pandemic and the war in Ukraine.

To access the chart pack, click here.

EM Ratings: Strengths and Struggles Amid Global Shocks

Luca and team note that for emerging markets (EMs), COVID-19's shock weighed heavily on utilities, banking, and transportation credit quality in the earlier stage of the pandemic (March 2020-February 2022). Then from February 2022, real estate and consumer products and non-bank financial institutions were hit more severely.

In terms of geography, Latin America saw the greatest effect on credit quality during the early COVID-19 period, whereas in the more recent period, Greater China has seen the bigger impact.

To the read the full article, click here.

EM Banks: Under Pressure From Tighter Financing Conditions??

Mohamed argues that emerging market banking systems are under pressure from tighter international financing conditions ushered in by higher-for-longer rates. Banks' exposure to those pressures can be direct, through their own significant net external debt, or indirect, due to corporate or sovereign weaknesses linked to net external debt.

Among the five banking systems assessed in this report, Turkey and Tunisia appear the most at risk.

To read the full article, click here.

Economists in the News: Broyer on BBC

Sylvain appeared on the BBC World Business Report earlier this week to preview the release of the UK inflation numbers.

To watch the interview (UK only), click here.

Look Forward Journal: Private Debt

In the latest installment of our flagship cross-divisional research series, the team concludes that markets are entering a moment of fundamental transition. Private markets have moved off the sidelines and into the spotlight across multiple industries and sectors.

While public markets remain essential to the global economy, many companies today have grown to dominant market positions without ever engaging with public financing.

To read the full report, click here.

Distressed Exchanges Spur A Sharp Rise In Corporate Defaults

Nicole and team report that the global corporate default tally rose to 37 this year--tied with 2016 for the highest year-to-date default tally since 2009. The U.S. and Europe are driving defaults, with both regions well above prior years' totals. By sector, the media and entertainment sector led defaults in March, with five.

Distressed exchanges are responsible for nearly half of the defaults so far in 2023 and are at their highest year-to-date level.

To read the full report, click here.

Upcoming Credit and Risk Symposium: Unlocking Possibilities

Please join me and my colleagues from S&P Global Ratings and S&P Global Market Intelligence to discuss how challenges from geopolitical conflicts, high levels of inflation, and supply chain disruption are forcing companies to reassess how they manage and monitor their risk exposure.?

To register for this complimentary symposium, click here.