Standard & Poor's expects a growing number of emerging market sovereigns to request ratings in the near term after it assigned new ratings to Georgia (B+), Sri Lanka (B+) and Nigeria (BB-) recently.
"Double-B 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," says David Beers, global head of sovereign ratings at Standard & Poor's in London.
Of the 110 sovereigns it covers, S&P has placed 19 on positive outlook (including some new and prospective European Union members, as well as 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 hurdles in the structuring of their economies.
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 EUR0.7 trillion and emerging market issuance should fall by around 7% to $0.6 billion.