Quantifying the risks in emerging markets...
March 2006 | Sovereign Risk RatingIf you would like to subscribe to Emerging Markets Monitor and gain instant access to this article, please click here to subscribe.
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BMI's proprietary sovereign risk rating index, which we are launching today, has been more than a year in development, during which time, as readers will be well aware, we have frequently expounded our positive long-term view of emerging markets' 'odyssey of convergence'. As such, it is something of an irony that we are launching it following a week in which spiking US Treasury yields have set the cat amongst the emerging pigeons, and seen EM debt prices dip across the board. All the more reason, then, for a comprehensive assessment of the creditworthiness of our key markets. If the era of high global liquidity and unbridled investor risk appetite is drawing to a close, then selectivity again becomes the watchword and a detailed assessment of the risks facing each sovereign will become invaluable. That is the primary goal of this index. The ratings reflect our macroeconomic, political, and market assessments across the emerging markets universe, in order to give a forward-looking and responsive portrayal of external debt vulnerabilities. The research should be a timely heads-up on the potential for sovereign outperformance in the financial markets, and will provide a broad overview of country risk factors. We will be updating our analysis on a monthly basis online, and publishing our findings quarterly, in order to deliver the most accurate and useful insight into developments in sovereign risk.