“ESG credit risks more prevalent in emerging markets” –The Asset – November 26, 2020

On November 26, 2020 The Asset covered a new report by Moody’s.

“Environmental, social and governance (ESG) credit risks are more prevalent in emerging markets than in developed markets, while issuers’ capacity to respond to these risks is often also weaker, according to a new report.

Moody’s Investors Service says 36% of its nearly 1,800 rating actions on debt issuers in emerging markets in 2019 involved material ESG considerations, dominated by governance factors.

‘We expect ESG considerations to become even more material to debt issuers’ credit quality globally – and particular in EMs – given the range and rise of ESG risks such as climate change and public health,’ says Nishad Majmudar, a Moody’s assistant vice president and analyst.

The credit rating agency also notes that ESG considerations are more prevalent in rating actions for public-sector debt issuers in emerging markets than for their peers in developed markets, reflecting generally weaker fiscal, financial and institutional characteristics. The difference is especially clear when comparing factors such as challenges to sustainable development and vulnerability and readiness for physical environmental risk.

Governance was cited as an ESG risk across a broad range of private-sector ratings, indicating its importance and pervasiveness in Moody’s credit analysis. Governance considerations tend to be issuer or transaction-specific, whereas environmental and social considerations tend to be more sector-specific.”

You may read the article on The Asset internet site.