DATA VISUALS - FOR QUALIFIED INVESTORS

BlackRock Sovereign Risk Index – Q1 2018

19-Jan-2018
By BlackRock Investment Institute

We update our BlackRock Sovereign Risk Index (BSRI), which aims to provide investors with a framework for tracking sovereign credit risk in 60 countries.

Quarterly update

  • The United Kingdom fell two notches in our ranking to 22nd, dragged down by a weakening Willingness to Pay score after the World Bank downgraded the UK’s perceived government effectiveness. Political uncertainty around the government’s handling of Brexit negotiations appears to have taken a toll. The Philippines suffered a three-notch drop as downgrades to its government effectiveness and higher political risk pulled down its Willingness to Pay score. Turkey’s government effectiveness score also fell but did not affect its overall BSRI ranking.
  • South Africa dropped by one notch on the back of worsening budget deficit expectations and higher interest burden forecasts. The hit to the country’s Fiscal Space score more than offset improvements in its Willingness to Pay metrics.
  • Kazakhstan and Russia jumped four and two notches, respectively, with both countries benefitting from improvements in projected budget deficits. Kazakhstan, in particular, saw a big jump in its Fiscal Space score. This suggests the economy is on a more sustainable path following the rebound in oil and gas prices.
  • India’s marginal weakening across several metrics saw its ranking slip two spots to 38th. The culprits included a slightly lower revenue-to-GDP score, a pickup in the volatility of inflation expectations and deterioration in budget deficit projections all dragging the country’s overall ranking lower.

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