The credit risk gap between developed and emerging markets is closing and it may be hard to distinguish between the two. In fact, there is a strong argument that emerging markets are being penalized by ratings agencies. A review of some simple examples makes the point. Using Spain and Italy as samples of developed market credit risks are extremes but tells the story of change.
Taiwan and South Korea are in much better credit shape than Spain and Italy. The rest of Asia are all in stronger positions. Even risky South Africa may show a better fiscal balance sheet. So what is an emerging market?
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