The balance of outlooks globally has turned sharply negative since the onset of the coronavirus pandemic, according to Fitch Ratings’ new interactive country-by-country map of bank rating trends.
The report shows that the proportion of bank ratings on Negative Outlook or Rating Watch Negative (RWN) shot up to over 60per cent at end-1H’20 from 13per cent at end-2019. The report stated that the proportion on RWN was 10per cent, the highest in recent years, reflecting near-term risks to many banks’ ratings, adding that there were virtually no ratings on positive outlook or rating watch positive.
According to the report, “the outlook balance was most negative in emerging markets in the Americas, with 87 per cent of ratings on Negative Outlook or RWN, reflecting the already high proportion of Negative Outlooks at end-2019 (31%), and rating actions in 1H20 to reflect deteriorating operating environments and sovereign rating actions.
Outside Latin America, the proportion of Negative Outlooks/ Watches was lower in emerging markets (54%) than in developed markets (73%), as a higher proportion of ratings in emerging markets are driven by sovereign or institutional support.
“European developed markets had the secondhighest proportion of Negative Outlooks/Watches and the greatest increase in 1H20.