SOVEREIGN AND SUPRANATIONALSECTOR IN-DEPTH 11 April 2016ContactsGlenn Levine 1.212.553.9595Assc Dir-Sr Research Analyst glenn.levine@moodys.comXian Li 1.212.553.1404Senior Research Analyst xian.li@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Sovereign Risk ReportSoutheast Asias Risk Profile Improves The slowdown in the global economy has had little impact on the credit risk profile of sovereigns in Southeast Asia. Each of the five Southeast Asian sovereigns that we cover in our database Indonesia, Malaysia, the Philippines, Thailand, and Vietnam have seen their five-year sovereign EDFTM (Expected Default Frequency)1 metric decline since the start of 2016. On a relative scale, sovereign EDF measures for these five countries have fallen by an average 25% since the start of the year; in absolute terms this corresponds to a decline of 6 to 20 basis points.Exhibit 1Five-Year Sovereign EDF Metrics for Southeast Asia (%)To some extent, this is part of a broader global trend, with 43 of the 69 sovereigns in our EDF database recording a decline in their five-year EDF since the start of the year. Yet it also underlines the strength of Southeast Asias economies and the relative stability and fiscal prudence of their respective governments. The global economic slowdown has hit economic growth across much of the developing world, but has so far had only a minor impact on Southeast Asias economies. All five countries are expected to report similar GDP growth in 2016 compared to 2015. Even Malaysia, with its dependence on petroleum productionMOODY'S ANALYTICS SOVEREIGN AND SUPRANATIONAL2 11 April 2016 Sovereign Risk Report: Southeast Asias Risk Profile Improvesand exports, and the ongoing 1MDB corruption scandal ensnaring its politicians and business leaders, is expected to report only a modest slowdown in 2016.The relative...
