SOVEREIGN AND SUPRANATIONALSECTOR IN-DEPTH 31 AUGUST 2015ANALYST CONTACTSIrina Baron Asst Dir-Research Associate irina.baron@moodys.comXian Li 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 ReportThailands Weak Economy and Uncertain Politics Keep Sovereign Risk Elevated Sovereign EDF' (Expected Default Frequency) 1 ,2 , metrics, which measure the expected probability of default over a one- and five-year horizon, declined in all five major regions in the week ending August 21. Market sentiment stabilized following US Federal Reserve Presidents William C. Dudleys comment that raising interest rates had become less compelling given recent global economic uncertainty, suggesting that the Feds imminent rate hike, previously penciled in for September, may be postponed yet again.Europe recorded the largest weekly decline in the average risk of default. More than half of the thirty two countries with Sovereign EDF measures experienced a weekly decline in default risk. Russia and Italy led the group , with their one-year Sovereign EDF measures falling by 25% and 15%, respectively. Mexico and Venezuela topped the list of Latin American countries with declining default risk, while Thailand and Korea improved the most in the Asia-Pacific region.By contrast, Greeces Sovereign EDF increased across the week as its risk profile is now largely determined by local and European political developments, rather than global financial sentiment. The one-year Sovereign EDF measure rose from 2.1% to 2.5% over the past week as the country experienced more political turmoil. Greek Prime Minister Alexis Tsipras stepped down on August 20, following opposition from within the Syriza party over his agreement to new income cuts and tax hikes. On August 27, 53 of the 201 members of the Central Committee of Syriza ...
