Mid-sized corporate issuers most at risk in 2015

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This year, the biggest headaches for corporate issuers in Europe, the Middle East and Africa will be geopolitical risks, fears over deflation and weaker growth prospects, says the latest report from Fitch Ratings.

In EMEA Corporate View 1Q15, the credit rating agency writes that smaller, B-rated companies in the Eurozone are likely to feel the negative effects of deflation more keenly than their investment-grade corporate counterparts.

The ratings agency also said that emerging market corporate issuers across the EMEA region are likely to experience slightly higher leverage.

The diplomatic crisis with Russia still looms large, having shut down the international bond markets for domestic issuers over the past six months. The issue is being fuelled by currency volatility and sanctions. Currency fears are also prominent in Turkey, says Fitch, where largely unhedged forex exposures mean that corporates are especially vulnerable to knock-on effects from currency devaluation.

High yield issuance in Europe appears to be going strong, however. Growth remained steady during the first three quarters of 2014, although it has slowed a little in the past few months as a result of market volatility.

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