Increased signs of political unrest in South Africa, the contintent's most developed nation, prompted Moody's recently to lower its credit outlook on the country from stable to negative. "Political uncertainty is overplayed."
"For the first time ever in the 16 years of freedom and democracy, we see black and white South Africans celebrating together in the stadiums and fan parks," said South African President Jacob Zuma during last year's World Cup hosted by the country.
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Equity capital is fleeing the debt-ridden economies of Europe, particularly EU maket countries, in droves as evidenced by huge declines in their equity markets for the third quarter of this year. One bright spot: Slovakia.
To no ones surprise, Greece's stock market, the Athens Stock Exchange, was battered in the third quarter of 2011 declining 45.3 percent from July to September, according to a quarterly performance ranking of the world's 65 major stock market indexes released earlier this month by the Wall Street Journal.
Credit ratings firms fail to see sovereign defaults coming soon enough and have typically been too late in issuing key downgrades of government or sovereign debt. "Once a crisis is obvious, it's obvious to everybody."
The three major credit ratings firms -- Standard & Poors, Moody's and Fitch Ratings -- have a poor track record in predicting sovereign defaults soon enough to save creditors and investors, according to an analysis of 35 years of data conducted by the Wall Street Journal.
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In its downgrade of the U.S. credit rating from AAA to AA+, S&P offers keen insight into the world of sovereign credit risk. "Uncertainty about the resolve of the U.S. government to take decisive action on fiscal issues."
As credit decisions go, this has to rank as one of the biggest. On August 5th, Standard & Poors, one of the world's three major credit rating agencies and long considered a key arbiter of sovereign risk, held firm to its view that the U.S. government "fell short" in its recent efforts to reduce its growing debt and as a result downgraded the country's credit rating from AAA to AA+ with a negative outlook.
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Currency devaluations and brazen government seizures of foreign assets have turned Venezuela, the third largest economy in Latin America, into one of the riskiest and costliest places in the world to do business.
In 2009, Tidewater, Inc., a $1.1 billion maritime oil drilling support and services company based in New Orleans, Lousiana, had 15 vessels operating on Lake Maracaibo in Venezuela to support that nation's oil industry. As it does for many international oil companies, Tidewater's vessels provide an array of services in the areas of oil exploration, field development and production.
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A closer look at the Mediterranean nation of Greece - a country that garnered little attention before its financial crisis - reveals how a combination of spending, debt and lack of growth have brought the world's oldest democracy to the brink of insolvency.
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With the nation of Greece in financial turmoil, CreditPulse takes a look at some Greek companies that aren't faring much better than the country itself when it comes to debt and credit risk.
In early 2008, both Greece and one of its largest companies, Hellenic Telecommunications Organization SA - a company majority owned by the Greek state - needed cash and they needed it fast. Fortunately for both, the largest telecom in Europe, Deutche Telekom AG, the $74.3 billion German telecom giant, was interested in expanding into the Greek market.
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One of the most difficult aspects of doing business internationally is the lack of reliable credit risk information for many countries. In this section, CP will provide insight into the financial, economic and political risks of various countries around the world.
