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Sovereign Downgrades Soared In 2020

EMERGING MARKETS
  • Concerns over default risk rise as proportion of downgrade to upgrade soared in 2020.
  • With global economy contracting by 3.4% in 2020 due to the pandemic, sovereign downgrades increase nearly three-fold last year, from 11 to 32, while upgrades declined from 13 to 2 (according to Fitch study).
  • Hence, the downgrade to upgrade ratio surged from 0.8-to-1 to 16-to-1.
  • EM sovereigns saw 26 downgrades and no upgrades during 2020.

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