Expectations that interest rates will begin to fall relatively soon have seen some emerging markets experiencing an easing of the financial constraints in the bond markets. We thought it would be interesting to look at some of the leading APAC and emerging countries, noting their current S & P credit ratings and recent movements.
Firstly, we will look at the A-rated countries and recent movements in S&P rankings during what have been difficult times for the global economy. The selection includes:-
Singapore AAA
Singapore has one of the strongest economies in the world, with the last movement in the S&P credit rating back in 1995, an upgrade from AA+ to AAA.
Taiwan AA+
The Taiwan S&P rating enjoyed upgrades in April 2021 and April 2022, resulting in the current AA+ ranking.
United Arab Emirates AA
The United Arab Emirates rating was last reviewed in 2007 and given a stable outlook by S&P, having remained at AA for over 25 years.
Hong Kong AA+
In 2016, Hong Kong's AAA rating was put on a negative outlook and downgraded to AA+ in 2017. Even though the credit rating was downgraded, this is still the second-highest rating in the S&P rankings.
Qatar AA
The Qatar S&P credit rating has fluctuated slightly over the last 20 years, with the previous review back in 2022 resulting in an upgrade from AA- to the current ranking of AA.
South Korea AA
Since 2005, South Korea has enjoyed a gradual upgrading of its credit rating with Standard and Poor's. Starting at A in 2005, the rating now stands at AA, having been as low as BBB- as recently as 1997.
China A+
Chinese has the most influential economy in the region, leading where many other governments and countries follow. The credit rating remains relatively stable during challenging times for the global and APAC economies.
Japan A+
The AAA rating for Japan in 1989 seems light years away, with a gradual decline in the economy to the recent low of A+ in the S&P ratings. Recently, there have been encouraging signs about an economic recovery, with inflation seemingly more under control than at any time over the last 40 years.
There are also several emerging economies to consider, often facing increased borrowing costs in difficult times, but emerging even stronger during the recovery. We have looked at a selection of emerging economies:-
Thailand BBB+
While Thailand had an A rating back in 1997, this fell to a low of BBB- in 1998 before a subsequent rally to the current level of BBB+. Seen as one of the region's more proactive and engaging countries, there are high hopes for long-term growth.
Philippines BBB+
The Philippines S&P rating has gradually improved from a low of BB- in 2005, remaining relatively stable on the way up to a BBB+ rating.
Indonesia BBB
Indonesia is forecast to be one of the largest economies in the region, indeed one of the global front runners, over the next 20 years or so. This is reflected in the strengthening S&P rating, which was as low as CCC in 2001. The increase to a BBB rating, especially in light of the recent global financial challenges, is impressive!
Vietnam BB+
As one of the region's emerging market-leading lights, Vietnam continues to attract significant overseas investment and a relatively stable S&P credit rating. Rated at BB- as recently as 2011, there's been a gradual improvement to the current level, backed by support from international investors and positive signs about the Vietnamese economy.
Conclusion
It is easy to cast a glance at the latest credit ratings for countries across the APAC region, but the devil is often in the details, recent changes. The above context gives an idea of the short to medium-term performance of these economies, as reflected in their S&P rankings.