Bangkok--13 Sep--Standard & Poor's
The growing economic dynamism of Asia and its expanding role in the world economy stand in contrast to Latin America's modest economic progress in recent decades, according to an article published on Sept. 6, 2006, by Standard & Poor's Ratings Services. The article, which is titled "Asia And Latin America: A Tale Of Two Emerging Markets," says that although any discussion of two large regions inevitably overlooks individual exceptions in both places, Standard & Poor's believes it's worthwhile to examine the key differences between Asia and Latin America, including the main factors that explain the gap in their sovereign ratings. "Doing so also reveals the challenges that Latin America faces in maintaining the good pace of GDP growth it has achieved during the last three years," said Standard & Poor's credit analyst Joydeep Mukherji. "It also illustrates the trend toward better sovereign creditworthiness on average."
The overwhelming majority of sovereign ratings in Latin America are either in the 'B' or 'BB' categories, and only two (Chile and Mexico) are investment grade. In comparison, there are almost as many Asian sovereigns with investment-grade ratings (a long-term foreign currency rating of 'BBB-' or higher) as there are those that are speculative grade. Even excluding the four highest-rated Asian sovereigns (Singapore, Taiwan, Japan, and Hong Kong), the average is about 'BB+', just one notch below investment grade and above the average rating in Latin America.
The report discusses the underlying causes of higher macroeconomic instability in Latin America compared with Asia and the negative impact that it continues to have on sovereign creditworthiness in the Latin region.
"Still, there are grounds for cautious optimism about Latin America that go beyond the currently favorable stage of the global business cycle," Mr. Mukherji noted. Chile especially distinguishes itself through its growing political maturity and wealth. Some countries, such as Brazil and Mexico (the region's biggest), have made steady progress in recent years and enjoyed a rising sovereign credit rating.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contacts:
Joydeep Mukherji, New York (1) 212-438-7351