Wednesday 9 May 2012

BlackRock Sovereign Risk Index 2012: Singapore and Taiwan debut in top ten

Asia Asset Management, 7 May 2012

BlackRock has released the results of its latest BlackRock Sovereign Risk Index (BSRI). During the first quarter of 2012, Germany, Columbia and Peru improved notably in the rankings and four newcomers to the index, including Singapore and Taiwan, bring the total number of countries assessed to 48.

Both Singapore and Taiwan debut in the top ten, due to their sterling debt profiles. Singapore parachuted into second place and Taiwan into sixth for their negative net debt, running tight budget ships and having debt that is held almost exclusively by domestic players. Two other newcomers, Slovakia and Slovenia, joined many of their eurozone colleagues, entering the list in the bottom half of the index, in 34th and 38th place respectively.

Elsewhere in Europe, Germany jumped four positions to eighth place during the quarter, making it the BSRI’s biggest climber. Germany’s upgrade was a result of high ratings for its government stability. Other countries of note included the USA, the world’s largest issuer of sovereign debt, which is placed in 15th spot, sandwiched between The Netherlands and Austria. South Korea, Belgium and Croatia saw the biggest slides, down two spots each.

Joel Kim, managing director and head of Asia-Pacific fixed income at BlackRock, said: “Singapore is a model citizen when it comes to its (negative) net government debt levels. The same can be said of Taiwan and we’re glad to be able to introduce these two countries into the BSRI index. Singapore has no foreign currency government debt to speak of while Taiwan has very little. Singapore scores higher in the Willingness to Pay category because of its government stability.

“The addition of Slovakia and Slovenia, also allows us to present a clearer picture of the world’s sovereign risk profile today. We believe the new list of countries will be able to provide investors with a better framework for tracking global sovereign risk,” Mr. Kim said.


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