Bangkok--21 Feb--Standard & Poor's
Medium- and long-term commercial borrowing by national and local and regional governments (LRGs) is projected to fall worldwide by 4% to US$4.82 trillion in 2007 from US$5.05 trillion in 2006, Standard & Poor's Ratings Services said in its third annual survey of government debt issuance.
The report, entitled "Falling Government Borrowing Requirements Will Support Rising Public Sector Creditworthiness In 2007," provides regional breakdowns of issuance and total debt stock for all rated sovereigns and LRGs worldwide. In addition to this comprehensive umbrella report, which discusses global trends, individual commentaries on 2007 issuance by sovereigns and LRGs in each geographic region are also available.
According to Standard & Poor's credit analyst John Chambers, improved fiscal performance in Asia, particularly Japan, is the fundamental reason for the fall. This trend is viewed as consistent with the positive trend in government ratings worldwide, which is expected to continue for the remainder of 2007.
Among the highlights detailed in the report, Standard & Poor's expects gross issuance of emerging market sovereigns to rise 4% in 2007, to US$782 billion. "Brazil, Mexico, Turkey, and China, the largest emerging market issuers, will all increase their borrowing," Mr. Chambers noted. "Brazil and Mexico prefunded much of their 2006 borrowing requirements in anticipation of their elections, and now are returning to a more normal level. China's increase reflects a greater share of maturing long-term debt that must be refinanced," he said.
Borrowing by subsovereign issuers is also expected to fall sharply in Europe. "We project European LRG issuance to fall 18% to the equivalent of US$200 billion," explained Mr. Chambers. "LRG issuance will also decline in Latin America, Japan, and the rest of Asia, but by smaller percentages. Only in North America will LRG debt issuance rise, he added"
Global debt stocks are also projected to rise in U.S. dollar terms. "We estimate that the stock of global general government debt will reach US$30.4 trillion at year-end 2007, an increase of 6% over year-end 2006," noted Mr. Chambers. "Sovereign debt is expected to match this rate increase, but LRG debt is estimated to grow by 10% by year-end 2007. Among sovereigns, debt continues to grow at a more rapid pace-primarily in Latin America (24%), reflecting the normalization of borrowing programs in Mexico and Brazil," he concluded.
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 representatives provided.
Media Contacts:
David Wargin, New York (1) 212-438-1579
[email protected]
Matthew McAdam, London (44) 20-7176-3541
[email protected]
Analyst Contacts:
John Chambers, CFA, New York (1) 212-438-7344
David T Beers, London (44) 20-7176-7101
Takahira Ogawa, Singapore (65) 6239-6342