Investors be warned. There have been more credit-rating downgrades in developing nations in the first nine months of this year than in the whole of 2014 and the outlook keeps getting gloomier, according to Standard & Poor’s.
An economic slowdown and lower commodity prices are to blame, said Diane Vazza, head of S&P’s Global Fixed Income Research Group, in a report Wednesday. S&P cut the ratings for 88 bonds sold by developing countries and companies in the third quarter, including Brazil, Zambia and Ecuador, while raising the grades for 22 securities. That brings the total number of downgrades to 224 this year, compared with the 206 cuts in 2014.
The ratings cuts will continue to overwhelm emerging markets in the coming months. As of Sept. 30, about 28 percent of companies in developing nations have a negative outlook or are on the watch list for potential downgrades, compared with 24 percent in the second quarter, the report showed.
This post was published at David Stockmans Contra Corner on October 30, 2015.
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