Global Sovereign credit 2014 risk, steady but rising

Dagong, China's domestic rating agency, said Tuesday in a report that the overall global sovereign credit risk will exhibit a steady but rising trend in 2014. Taking advantage of their dominant position in the global political and economic system, some highly-indebted developed countries has started to make policy adjustments to save them from a deepening currency crisis, said Dagong in the report entitled 2014 Global Sovereign Credit Risk Outlook. "Although this may help alleviate their economic and fiscal pressures to some extent, it cannot fundamentally improve their solvency. In addition, it will cause the global credit environment to deteriorate," it said. Affected by the spillover of developed countries' credit risk, Dagong believes the pressure to maintain economic growth and stability for the majority of developing countries will rise markedly and their sovereign credit risks increase. Dagong said although capital inflows and tight fiscal policy are likely to ease the U.S. economic and fiscal pressure, this will not reverse the general trend that the growth of federal debt significantly outpaces that of economic fundamentals. The sovereign credit risk of the U.S. federal government will not be improved fundamentally. With the improvement of capital inflow and domestic demand, the economy of the eurozone will rebound slightly, and pressure on its sovereign debt crisis will decrease. Compared with developed countries, the inherent structural problems of developing countries make them riskier and more vulnerable to external change, said Dagong.