Asia Debt: Mixed Outlook, As Politics Weighs

June 2007 | Sovereign Risk Rating

Asia's credit fundamentals should generally continue to defy political challenges, thanks to a combination of robust economic growth, respectable trade and current account surpluses, rising forex reserves and FDI, and appreciating currencies - the latter of which reduces the local costs of external debt repayments. Thus, five of our rated countries have seen their total scores rise, while only two have seen their scores fall, mainly on highly uncertain political outlooks. Yet despite the generally positive picture, the outlook for foreign bond performance is generally mediocre, especially in the high-grade credits, most probably because all the good news is priced

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