...Emerging Markets Recovery Ratings Capped by Jurisdictional Uncertainties: Fitch Ratings assigns "soft caps" to issuers' recovery ratings to reflect the strength or weakness of local insolvency regimes. These soft caps are divided into four groups, rated `A' through `D'. Emerging markets (EM) continue to present incremental risks to fixed-income investors in the context of creditor treatment in the event of default. With the exceptions of South Africa, Chile, and Mexico, all EM countries are constrained by the most punitive of the soft-caps. Laws Are Relatively New and Untested: For all of the countries analyzed, except for the UAE and Argentina, the insolvency laws were either recently enacted or revised in or after 2000. This meant that these laws have a limited proven track record, particularly given the strong economic growth and consequent absence of defaults in these countries prior to 2007¡2008. Legal Principles Are Unevenly Applied: Laws that protect the interests of investors and...
