The credit ratings for 138 countries around the world, in one chart

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  • Moody’s Investors Service has released its latest sovereign credit rating outlook report.
  • The group says global economic growth likely peaked this year, meaning the window for addressing credit challenges is “gradually closing”.
  • Moody’s says the largest external challenges facing government’s around the world are “a tightening global financial conditions, shifting capital flows, higher oil prices and disruptions to trade flows”.

If you’ve ever wondered what countries are deemed to be the best and worst credit risks in the world, you’ll likely be interested in the chart below.

From Moody’s Investors Service, it shows the sovereign credit rating for every country the group monitors.

Moody’s Investors Service

Here’s how to decipher that chart.

The further out a nation sits from the centre, the more creditworthy Moody’s deems it to be.

Those in the white rings, or with a rating of Baa3 or above, are investment grade while those in the yellow rings carry a junk rating, implying greater risk.

A bold green symbol for a country indicates it currently carries a positive outlook, potentially paving the way for a ratings upgrade in the future. On the other hand, those with a red symbol are on watch negative, signalling the rating may be cut by Moody’s in the future.

Currently, 104 of sovereigns have a steady credit rating, while 15 are on watch for an upgrade. Only 19 government’s currently have a negative ratings outlook, near half the 35 level seen just two years ago.

The improvement largely reflects an improvement in the global economy over this period, helping to improve government finances, at least from a broad perspective.

Looking ahead, Moody’s says global economic growth likely peaked this year, meaning the window for addressing credit challenges is “gradually closing”.

“We expect global growth to slow from its 2018 peak over the coming years, particularly in some of the more fragile emerging markets,” the group says.

“Our base case is that the window will remain open through 2019, but it is closing, and the risk of tail events causing sharp movements in the ratings of vulnerable sovereigns is rising.”

Moody’s says the largest external challenges facing government’s around the world are “a tightening global financial conditions, shifting capital flows, higher oil prices and disruptions to trade flows”.

“Key fundamentals — growth prospects, indebtedness, domestic and external imbalances, and institutional strength including the capacity and credibility of policy makers — will determine individual sovereigns’ resilience to these shocks,” it says.

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