EMEA Corporates Face Deflation, Geopolitical Risks, says Fitch

Geopolitical risks, deflation fears and weaker growth prospects will, to varying degrees, affect the outlook for Europe, Middle East and Africa (EMEA) corporate issuers in 2015, according to a report by Fitch Ratings.

Entitled
EMEA Corporate View 1Q15
, the credit rating agency’s (CRA) report suggests that within the eurozone periphery, smaller companies in the ‘B’ rating category are likely to be worse affected than large investment-grade corporates in a deflation scenario. Fitch also expects slightly higher leverage across EMEA emerging market (EM) corporate issuers.

The Russian crisis effectively shut the international bond markets for domestic issuers in the second half of 2014, with effects exacerbated by sanctions and currency volatility. In Turkey, largely un-hedged foreign currency exposures make corporates vulnerable to the effects of currency devaluation.

In the latest edition of its
EMEA Corporate View Dashboard
, Fitch also provides a quarterly snapshot of EMEA corporate market conditions, including bond issuance, spreads and rating migrations. The report also provides a summary of quarter-on-quarter (qoq) changes in sector forecasts and rating outlooks.

The report highlights the strong growth in European high yield issuance during 2014, albeit slowing down in Q414 amid some market volatility, high yield defaults and continued favourable funding conditions for higher-rated issuers.

The full report is available at fitchratings.com or by clicking
this link
.

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