Of the 110 sovereigns it covers, S&P has placed 19 on positive outlook (including new and prospective European Union members, and Brazil and China) and seven on negative outlook. Most notably, Italy continues to be on negative outlook, joining the ranks of countries such as Belize, Bolivia, Hungary and the Philippines, all of which face significant structural hurdles.
Overall, S&P expects total global government issuance to total $5.6 trillion in 2006, level with 2005. Of this, sovereign issuance is expected to fall 1% to $4.6 trillion, while local and regional government issuance is expected to rise 1.5% to $0.9 trillion.
Regionally, the US and Japan will be the top sovereign borrowers this year with just under $1.5 trillion each, with the level of borrowing in the US rising and that of Japan falling. Meanwhile, Eurozone issuance is expected to rise 2% to €0.7 trillion and emerging market issuance should fall by around 7% to $0.6 billion.
"BB-rated sovereigns are a rapidly rising category. This reflects both the greater interest investors are showing towards sovereigns that until now have not been rated and the recognition by governments of having a credit rating, even if it is not as high as they would like,” said David Beers, global head of sovereign ratings in London.