Regional and local governments in emerging markets generally report weaker infrastructure and higher levels of poverty and inequality than their advanced economy peers. Given their limited capacity to address these challenges, we expect that social considerations will continue to weigh on their growth and financial metrics.
Physical climate risk is broadly credit negative for sovereigns, particularly for emerging markets with climate-dependent economic structures and low-quality infrastructure and healthcare systems. Many have begun to take measures to increase climate resiliency, but fiscal and institutional constraints may slow adaptation efforts, which have yet to be widely tested.
Recovery in credit quality underway; corporate rating actions reveal a thoughtful and measured approach to credit
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The number of downgrades each month has dropped from a peak in April 2020, and rating activity is now more normal. Most rating actions are affirmations, and the trend is for more stable and positive outlooks as credit conditions improve. Looking ahead, reopening economies and business model changes are in focus.
Climate change, biodiversity loss, COVID-19 and protests against inequality are shifting the landscape for investors at an unprecedented rate.
Regional economic disparities are accelerating as the US recovers from the coronavirus-induced recession. On average, cities located in the fastest-recovering metro areas will see stronger tax base and revenue growth than their peers in slower-to-recover regions.
Recovery in credit quality under way; corporate rating actions reveal a thoughtful and measured approach to credit
Data from V.E, a part of Moody's ESG Solutions, show that sectors employing a higher share of women and with more widespread reporting on gender diversity have typically experienced fewer gender-related controversies since the start of 2020.
Moody’s ratings are driven by the local government’s capacity to support LGFVs and their specific characteristics
To support economic recovery, Chinese regulators have eased controls on shadow credit in the past few quarters. As the Chinese economy rebounds, regulators are refocusing on containing systemic risks and will likely resume their clampdown on shadow banking activities.
