Sovereign ratings during the Covid-19 period

The Covid-19 pandemic led to more than 70 sovereign rating downgrades mainly affecting African and Latin American countries. In Eastern Europe and Central Asia, the number of rating upgrades exceeds the number of downgrades during the 2019-2020 period.

notationAmong the 25 countries representing the latter zone, only Turkey, Armenia and Slovakia have been downgraded. At the same time, the ratings of Croatia, Bulgaria, Ukraine and Slovenia have been upgraded.

In just a few months, Standard & Poor's agency alone, one of the market leaders, has reviewed more than two-thirds of the sovereign ratings it usually assesses. Out of the 90 countries reviewed as of 11 May 2020, 51 are in the EMEA (Europe, Middle East and Africa) zone and 29 in the Americas. The other ten countries are part of the Asia-Pacific region.

Among all the countries surveyed, the agency downgraded more than one-fifth of the ratings. In addition, it downgraded the outlook for five of these countries from stable to negative. For the remaining 80% of the countries, only 15% had their outlook downgraded from stable to negative.

In general, the rating downgrades pertain to countries classified in the "speculative" category. The average rating assigned to these countries is "BB-".

For some countries in Latin America and Africa, the economic and fiscal outlook before Covid-19 was already weak. For these countries, the degradation of the economic and social fabric aggravated by the pandemic will be structural and long-lasting.

Covid-19 and corporate rating

Energy and oil companies, airlines, travel and leisure agencies, and those specialized in events are among the companies that were most affected by the health crisis.

Standard & Poor's downgraded or reduced the outlook for 1 015 companies in North America. More than 30 global companies with excellent ratings prior to the pandemic have been downgraded.

These companies, which include Ford, Rolls-Royce, Kraft Heinz, Renault, Delta Air Lines, Lufthansa, British Airways and Macy's, accumulated more than 320 billion USD in debt in one year.

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