How Have EMEA Sovereign Ratings Behaved In The Run-Up To This Turning Point In The Cycle?
Standard & Poor’s ratings are opinions on creditworthiness, independent of the credit cycle. Therefore, when we make decisions on raising or lowering a rating the focus is on fundamental and structural issues. The favorable financial conditions associated with the past few years, however, facilitated and, in many cases, prompted policy reforms that did genuinely improve sovereign creditworthiness. Most governments seized on the good times by modernizing their public debt management and the budgetary and monetary institutions governing economic policy making, as well as updating the regulatory environment, for example, in banking supervision. For some Central and Eastern European sovereigns, EU and eventual EMU accession led to rapid structural and institutional modernization that would otherwise have been implemented over a much longer period, if at all. Commodity-exporting nations, such as Russia and Middle Eastern sovereigns, have greatly improved their balance sheets, and Standard &
