Fitch: record number of countries downgrade during 2016 mid-year
Fitch — one of the three main ratings agencies — downgraded 15 countries in the first half of 2016. Plus, 22 countries are on Negative Outlook, meaning they are at risk of cuts in the future. This compares with a full-year peak of 20 downgrades in 2011 — so it looks like this year's final total of downgrades by Fitch may set a new record.
Lower commodity prices continue to be the single most important factor responsible for downward sovereign ratings momentum. Public and external finances in a number of commodity-exporting countries are not yet aligned with the new structurally-lower price environment, Fitch said in a report on Thursday.
Major oil producers downgraded this year by Fitch include Nigeria, Kazakhstan, Saudi Arabia and Brazil. The agency also sliced the U.K.'s rating last month following the country's vote to quit the European Union.
"Seven of the 10 most commodity-dependent sovereigns rated by Fitch have been downgraded in 2016 or are on Negative Outlook. All are in emerging markets," the agency said.
The role of credit rating agencies has been questioned in recent years — with some accusing them of biased ratings and irrelevance. However, their decisions remain crucial to investors subject to mandates that determine what sort of assets they can own.