24/2/17: Delays to second bailout cause spike in Greek risk

Euromoney covering the Greek crisis (latest iteration) with a comment from myself: http://www.euromoney.com/Article/3663144/Delays-to-second-bailout-cause-spike-in-Greek-risk.html.

6/1/17: Euromoney Country Risk Review 2016

Euromoney article on "Country risk review 2016: Populism is risky" quoting, amongst others, myself: http://www.euromoney.com/Article/3650139/Category/0/ChannelPage/207410/Country-risk-review-2016-Populism-is-risky.html.

28/10/16: Rising Risk Profile for Italy

Euromoney Country Risk on Italian referendum and rising risks relating to Euro area's third largest economy:

30/7/16: Europe's Bank Stability in Question

My comment for Euromoney on banking sector risks: http://www.euromoney.com/Article/3574602/Europes-bank-stability-is-in-question-say-country-risk-experts.html.

29/1/16: Estonia - A Safer Bet than France?

Euromoney have a good summary article on Baltic states’ economies and sovereign risk ratings (all of which are improving).

My comment toward the end.

http://www.euromoney.com/Article/3524950/Estonia-offers-safer-ption-than-France-or-South-Korea.html

Here is my take on Baltics ratings in full:

Given macroeconomic and geopolitical environment, Estonia's credit rating by all three rating agencies clearly lags overall trends in risks evolution. The geopolitical and external macroeconomic risks these ratings reflect are consistent with early 2015 assessments and are well behind the more recent trends. In simple terms, Estonia is over-due a one notch upgrade across all agencies, as reflective of expected re-acceleration in growth from 1.9 percent estimated in 2015 to 2.6 percent forecast for 2016-2017, and improving labour markets performance and inflation outlook.

Another key driver for the upgrade is significant abatement in geopolitical risks faced by Estonia in the context of the Russian-Ukrainian conflict that has evolved into a localised and frozen conflict with no expected spillover to the broader region.

Estonia also enjoys significant improvements in its terms of trade, via Euro devaluation, which is reflected in its relatively strong current account dynamics.

As far as Latvia and Lithuania ratings go, both countries' present ratings are in line with generally weaker economic, political and social institutions and with long term structural problems at play in both economies. While geopolitical risks have abated for these two countries since the start of 2015, supportive monetary and euro devaluation-driven competitiveness tailwinds are yet to manifest themselves in terms of current account balances and gains in real  productivity.

Unlike Estonia, both Latvia and Lithuania run current account deficits in presence of significantly higher unemployment and continued outflows of human capital. Of the two countries, Latvia is probably closer to a rating upgrade, which can come later in the first half of 2016.

5/11/15: Euromoney on Irish Sovereign Risk Ratings

Euromoney Country Risk scores for Ireland have been improving significantly in recent months, while some ratings agencies' view of sovereign risks here remain lagging. Euromoney takes a look at the matter here: http://www.euromoney.com/Article/3503504/Category/14091/ChannelPage/8959/Country-risk-Why-Moodys-is-wrong-on-Ireland.html?LS=Twitter

24/2/15: Euromoney on E.C. Europe Growth

My comment for the Euromoney on the topic of growth prospects in Eastern Europe: http://www.euromoney.com/Article/3429613/Category/14091/ChannelPage/8959/Polands-improving-fortunes-highlight-pockets-of-safety-in-CEE.html

28/9/2014: Political Risks and MENA Equities Valuations

A quick and accessible writeup on our (still work-in-progress) paper on "Political Risks and Financial Markets: MENA perspective" that uses data from Euromoney Country Risk surveys: http://blog.learnsignal.com/2014/09/26/political-risk-financial-markets/

12/9/2014: Irish Risk Ratings Comeback

Euromoney article on Ireland's improved risk ratings http://www.euromoney.com/Article/3379641/Category/14091/ChannelPage/8959/Irish-comeback-offers-a-safer-eurozone-bet.html

9/9/2014: Russia's Risks are Up, but Still Vastly Outperforming Ukraine's

Earlier today I tweeted about the drop in the drop in the credit risk score for Russia in the Euromoney Country Risk survey. As always, one has to look at the scores in both time series context and comparative to the peer economies.

Here is the Russian score in time series context:

It is worth noting that Russian score has declines rather steadily over time, but remains well ahead the regional average for the Eastern and Central Europe. Part of Russian score decline is driven by the ECE trend, but part is idiosyncratic.

Here are the main components of the score and the direction:

The sea of read arrows is what is of greater concern - scores dropping across all categories surveyed except one: debt indicators.

For comparative, the chart below shows evolution of Ukraine score, which is much less benign than that of Russia and remains deep under-performer in the Eastern and Central Europe:

Table below (click to enlarge) shows cross-countries comparatives for score and main components for Russia's main non-EU neighbours:

At the bottom of the above table, I list countries that are in 'credit risk' proximity to Russia, Ukraine, Belarus and Moldova. One thing is clear: Russia is comparing favourably to Eastern European countries that are EU members. Ukraine, Belarus and Moldova - do not. Their proximates are least-developed countries of the region.

25/4/2014: ECB, Denmark & Negative Rates, 'Peripherals' & Russia: today's links

Rumours mills been busy of late with all the talk about ECB doing 'whatever it takes' to get inflation going again. See this for example: http://www.spiegel.de/international/europe/ecb-prepares-measures-to-combat-possible-deflation-a-965636.html

Here is the best take on Denmark's brief brush with ECB's (allegedly) favourite weapon: the negative deposit rates:
http://www.bloomberg.com/news/2014-04-24/danish-central-bank-exits-negative-rates-first-time-since-2012.html


But while we are on topic of things monetary and fiscal, here is Euromoney take on what's been happening in the markets for 'peripheral' sovereign debt (note: my comment at the bottom): http://euromoney.msgfocus.com/c/123DSxhABTIFoVxuegyp64hKZL and alternative link: http://www.euromoney.com/Article/3334400/Category/14091/ChannelPage/8959/Ireland-and-Spain-lead-the-way-on-a-long-road-back-for-the-eurozone-periphery.html

To give you more context, here is the full comment I made:

The numbers cited are even better summarised in my earlier post on the subject here: http://trueeconomics.blogspot.ie/2014/04/2342014-some-scary-reading-from-eurostat.html

Meanwhile, here's what has been happening in the sovereign debt markets today - CDS spreads:

And finally, Russian credit downgrade: http://in.reuters.com/article/2014/04/25/russia-economy-ratings-idINL6N0NH19I20140425

3/4/3014: Latest Country Risk Updates: April 2014

Latest updates to ECR Euromoney Country Risk scores (higher score implies lower risk):

Two notable sets of changes:

1. Russia and Ukraine scores continue to fall, with Ukraine still leading Russia
2. Euro area 'periphery' scores continue to rise, with Portugal and Ireland showing biggest improvements.

20/3/2014: Latest Changes to Country Risk Ratings for Ukraine & Russia

Big drop in country risk scores for Ukraine and Russia today via @euromoney ECR :

Note: higher score implies lower risk.

Here is Ukraine's performance over time and comparative to ECE:

Note that current score is 30.43, lower than in the above chart.

And here is Russia's performance:

You can see the vast gap between two countries in terms of overall scores. Russia is running (still, even with latest decline) close to the world average and well ahead of regional average, while Ukraine clearly under-performs world and regional averages.

24/1/2014: The Fragile Five: Brazil, Turkey, South Africa, India and Indonesia

ECR wades in with a weekly analysis of the declining ratings across the Tier 3 countries: the Fragile Five: Brazil, Turkey, South Africa, India and Indonesia: here.

A chart and a table to summarise:

4/1/2014: Small downgrade for Russia in ECR survey

Euromoney Country Risk survey update for Russia out today is not a pleasant reading. Here are the details:

Overall score is down, signalling rising risk:

The risk factoring is still more benign than for a number of EU and some Euro area countries:

Recent trend is relatively stable, with some mild improvement on mid-2013:

But sub-scores and sub-factors are largely pointing South:

Overall, not a nice change... All scores in the above below 5.0 are of concern and those below 3.75-4.0 are of significant concern.

9/8/2013: Euromoney on Russian Economy's Risks

Deteriorating outlook for Russia and CIS is reflected in this Euromoney Country Risk note, citing my views on Russian economy's risks:

http://www.euromoney.com/Article/3230133/SubPage/9449/ChannelPage/0/Region/14091/Russia-and-CIS-satellites-failing-to-impressECR-Q2-2013-results.html

8/6/2013: Euromoney Credit Risk summary for Ireland

Latest results for Euromoney Country Risk survey for Ireland:

19/1/2013: Euro area banks need EUR400bn in capital: OECD

An interesting article via Euromoney (January 14, 2013) on European banks facing EUR400bn in capital shortfall estimated by the OECD.

A quote:

"A chief gripe is the extent to which European banks have refused to acknowledge their losses and write down bad loans, echoing the comedy of errors that has blighted Japan in recent decades.

... the European Banking Authority’s (EBA) financial stress test in June 2011 – which determined the capital-raising target for the regional banking system for 2012 – was based on an excessively benign treatment of the coverage ratio.

The median coverage ratio of the 90 European banks examined in the test was just 38% to meet the 9% core tier 1 capital ratio target. By contrast, the coverage ratio -  which indicates the amount of reserves banks have set aside relative to a pool of non-performing loans - for US banks equated to 67% in the first quarter of 2011, according to the Federal Deposit Insurance Corporation. ...

In a November report, before the Draghi ‘put’, Deluard noted: “In its mild form, European banks’ refusal to recognize losses could lead to a Japanese ‘lost decade’: banks evergreen their loans [ie, rolling over loans to borrowers who are unable to pay], regulators agree to play the ‘extend and pretend’ game, and the credit creation mechanism is permanently clogged."

And this week "the OECD, headed by Angel Gurria, added to the chorus of criticism – in contrast to the EBA’s upbeat assessments – by stating that the ratio of core tier 1 capital to unweighted assets of eurozone banks falls well short of 5% “in many cases”. On this benchmark, European banks face a €400 billion capital shortfall, or 4.5% of the eurozone’s GDP."

The OECD’s concern echoes that of the IMF, the Bank of England and the Basel Committee: "banks have inflated their asset values, despite the EBA’s self-congratulatory claim in July 2012 that banks in the region had reached a minimum 9% of the best quality core tier 1 capital to risk-weighted assets, in excess of the current international requirements."

And as OECD points out, the problem is much more than just 'peripheral' banks - the problem is Germany and France.

Here are two slides from my recent presentation on banking sector (I was planning to present more on this at the Irish Economy conference on February 1, but the session on banking got canceled, so will be posting the full slide deck here in few days time - stay tuned).