Developing Divergence

The latest update of our 50-country BlackRock Sovereign Risk Index (BSRI) is a bumper annual edition focusing on divergence across developed economies. Check out our interactive BSRI to view individual country scores, compare two countries and sort rankings by index components.

Drawing on a pool of financial data, surveys and political insights, the BSRI provides investors with a framework for tracking sovereign credit risk. The BSRI was launched in June 2011, following a BlackRock Investment Institute event on sovereign debt. The Model-Based Fixed Income Team created the BSRI as a quantitative framework to uncover and track sovereign credit risk in a changing world.

Mapping Sovereign Risk: BSRI Country Rankings by Quintile, December 2014

Highlights:

  • The U.S. and U.K. have gained ground in the BSRI on the back of strengthening economies, with markets expecting rate hikes in the year ahead.
  • The eurozone’s BSRI profile tells a story of stagnation in most of the core—and steady gains in the periphery (from a low base). Spain (up six notches), Netherlands (up four) and Italy (up two) were notable gainers.
  • Japan’s BSRI score has held steady despite a mounting debt load. A strong external finance position and government stability partially offset Japan’s poor fiscal health.
  • A sharp fall in oil prices was a key economic trend. We delve into the complex relationship between natural resources price swings and the BSRI scores of commodities exporters such as Russia.
  • India rose six notches, gaining much ground after the election of reformist Narendra Modi. China fell six notches on rising local government debts. Greece improved but faces a snap election that brings into question its eurozone membership.
Ben Brodsky and Sami Mesrour

Ben Brodsky and Sami Mesrour


Ewen Cameron Watt and Garth Flannery

BlackRock Investment Institute

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A World of Risk

BSRI Interactive Chart

Our interactive BlackRock Sovereign Risk Index ranks the creditworthiness of 50 countries.

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2015 BII Outlook

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The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock, Inc. and/or its subsidiaries (together, “BlackRock”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.