BBVA Research
Cross-Country Emerging Markets Unit
June 2014
Country Risk
Quarterly Report
Country Risk Quarterly Report –June 2014
2
Summary
• Financial Markets seem to be in a generalized risk-on mood. Financial...
Country Risk Quarterly Report –June 2014
3
Index
1.International Financial Markets , Global Risk Aversion and Capital Flow...
Country Risk Quarterly Report –June 2014
4
Section 1
Financial Markets Stress
BBVA Research Financial Stress Map
Source: B...
Country Risk Quarterly Report –June 2014
5
Section 1
Capital Flows Update
• During the 2Q 2014 portfolio reallocation
phas...
Country Risk Quarterly Report –June 2014
6
Section 2
Sovereign Markets Update
Sovereign CDS spreads
Source: Datastream and...
Country Risk Quarterly Report –June 2014
7
Section 2
Sovereign Credit Ratings Update
Sovereign Rating Index 2008-2014
Sour...
Country Risk Quarterly Report –June 2014
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Section 2
Sovereign downgrade Pressures Map
Rating Agencies Downgrade Pressure ...
Country Risk Quarterly Report –June 2014
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Vulnerability Radar: Shows a static and comparative vulnerability for different...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk Update: Europe Periphery I
Vulnerability Radar: Shows ...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk Update: Europe Periphery II
Vulnerability Radar: Shows...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk Update: Emerging Europe
Vulnerability Radar: Shows a s...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk Update: Latam
Vulnerability Radar: Shows a static and ...
Country Risk Quarterly Report –June 2014
14
Section 3
Regional Risk Update: Asia
Vulnerability Radar: Shows a static and c...
Country Risk Quarterly Report –June 2014
15
0.0
50.0
100.0
150.0
200.0
250.0
UnitedStates
Canada
Japan
Australia
Korea
Nor...
Country Risk Quarterly Report –June 2014
16
Private credit colour map (1999-2014 Q1)
(yearly change of private credit-to-G...
Country Risk Quarterly Report –June 2014
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Real housing prices colour map (1999-2014 Q1)
(yearly change of real housing p...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk Update: Western Europe
Latam: Sovereign Rating
(Rating...
Country Risk Quarterly Report –June 2014
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Section 3
Regional Risk: CD Swaps Update
Europe Periphery II: CD Swap 5 year
(...
Country Risk Quarterly Report –June 2014
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Vulnerability Indicators* 2014: Developed Countries
Source: BBVA Research, Hav...
Country Risk Quarterly Report –June 2014
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Section 3
Vulnerability Indicators: Emerging Economies
*Vulnerability Indicato...
Country Risk Quarterly Report –June 2014
22
Annex
Methodology: Indicators and Maps
• Financial Stress Map: It stresses lev...
Country Risk Quarterly Report –June 2014
23
Risk Thresholds Table
Macroeconomics
GDP 1.5 3.0 Lower BBVA Research
Inflation...
Country Risk Quarterly Report –June 2014
24
Annex
Methodology: Models and BBVA country risk
• BBVA Research Sovereign Rati...
Country Risk Quarterly Report –June 2014
25
BBVA Research Sovereign Ratings Methodology Diagram
Source: BBVA Research
BBVA...
Country Risk Quarterly Report –June 2014
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This report has been produced by Emerging Markets Unit, Cross-Country Analysis...
Country Risk Quarterly Report –June 2014
27
BBVA Research
Group Chief Economist
Jorge Sicilia
Emerging Economies:
Alicia G...
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Country Risk Quarterly Report, June 2014

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The global financial markets have entered in a new phase of Risk Appetite driven by Global Push Factors. Sovereign risk premia in some peripheral European countries and have reached levels not observed since the onset of the 2008 financial crisis. The Western Central Banks policies are still supporting the risk taking while some important Emerging Central Banks are joining the “push”

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Country Risk Quarterly Report, June 2014

  1. 1. BBVA Research Cross-Country Emerging Markets Unit June 2014 Country Risk Quarterly Report
  2. 2. Country Risk Quarterly Report –June 2014 2 Summary • Financial Markets seem to be in a generalized risk-on mood. Financial tensions and sovereign risk premia are decreasing across the board in both developed and emerging markets (EM). • The spillovers of the Ukraine crisis have receded and the military coup in Thailand has not had a visible impact. Global Risk Aversion (VIX) has been steadily decreasing for the past four months and it is currently at levels not observed since the beginning of 2007. However, risk in the Middle East is on the rise in Iraq and neighbor countries. • The sharp recovery in capital flows EM is moderating although still in positive ground. Financial Markets & Global Risk Aversion Sovereign Markets & Ratings Update • Sovereign risk premia in many developed markets, including some peripheral European countries have reached levels not observed since the onset of the 2008 financial crisis. Similarly some CDS spreads of many EM are near historical minimum levels. • The positive credit rating cycle in the EU periphery has strengthened with the upgrades of Ireland and Portugal by Moody’s and Spain by S&P and Fitch. • The decoupling of rating cycles between different emerging regions continues: Latam has suffered the downgrade of Argentina, Brazil and Venezuela. Within EM Europe, Russia was downgraded, but Romania was upgraded. Finally, Philippines was upgraded by S&P. Our own country risk assessment • Global factors were gaining importance again during the quarter. Risk appetite increased sharply supported by renewed actions by Western Central Banks (ECB new measures) and a softer position by the FED officials. The EM central banks are joining this stimulus and some of the key Central banks are already relaxing monetary policy. This is being supporting a rapid recovery in financial assets especially those with lower ratings. Some of them are quoting above fundamentals and furthermore the risk of correction is increasing. • Despite that the reduction in financial tensions and lower risk premia have supported the increase in risk appetite, complacency is out the question. The extraordinary market liquidity conditions may not last forever and could reverse. Global risk aversion is also at historically low levels, but it should move to more neutral levels once the push factors from major central banks start to die out.
  3. 3. Country Risk Quarterly Report –June 2014 3 Index 1.International Financial Markets , Global Risk Aversion and Capital Flows 2.Sovereign Markets & Ratings Update 3.Macroeconomic Vulnerability and In-house assessment of country risk on a Regional basis Annex – Methodological appendix
  4. 4. Country Risk Quarterly Report –June 2014 4 Section 1 Financial Markets Stress BBVA Research Financial Stress Map Source: BBVA Overall decrease in Financial Tensions in both developed and emerging economies during May. Financial tensions are at minimum levels. Corporates and banks the most benefited. No Data Very Low Tension (<1 sd) Low Tension (-1.0 to -0.5 sd) Neutral Tension (-0.5 to 0.5) High Tension (0.5 to 1 sd) Very High Tension (>1 sd) CDS Sovereign NanNanNanNanNanNan Equity (volatility) NanNanNanNanNanNan CDS Banks NanNanNanNanNanNan Credit (corporates) NanNanNanNanNanNan Interest Rates NanNanNanNanNanNan Exchange Rates NanNanNanNanNanNan Ted Spread NanNanNanNanNanNan Financial Tension Index NanNanNanNanNanNan CDS Sovereign NanNanNanNanNanNan Equity (volatility) NanNanNanNanNanNan CDS Banks NanNanNanNanNanNan Credit (corporates NanNanNanNanNanNan Interest Rates NanNanNanNanNanNan Exchange Rates NanNanNanNanNanNan Ted Spread NanNanNanNanNanNan Financial Tension Index NanNanNanNanNanNan USA Financial Tension index NanNanNanNanNanNan Europe Financial Tension Index NanNanNanNanNanNan EM Europe Financial Tension Index NanNanNanNanNanNan Czech Rep NanNanNanNanNanNan Poland NanNanNanNanNanNan Hungary NanNanNanNanNanNan Russia nannannannannannannannannannannannannannannannannannannannannannannannannannannan NanNanNanNanNanNan Turkey NanNanNanNanNanNan EM Latam Financial Tension Index NanNanNanNanNanNan Mexico NanNanNanNanNanNan Brazil NanNanNanNanNanNan Chile NanNanNanNanNanNan Colombia NanNanNanNanNanNan Perú NanNanNanNanNanNan EM Asia Financia Tension Index NanNanNanNanNanNan China NanNanNanNanNanNan India NanNanNanNanNanNan Indonesia NanNanNanNanNanNan Malaysia NanNanNanNanNanNan Philippines NanNanNanNanNanNan LatamEMAsia 2010 G2EMEurope 2010 USAEurope 2008 2009 20132012 2014 20142008 2011 2009 201320122011 D J F M A M # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # D J F M A M # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Changes (last 6 months m/m) # < -2 # (-2)-(-1) # (-1) - (-0.5) # (-0.5) - (-0.2) # (-0.2) - 0.2 # 0.2 - 0.5 # 0.5 - 1 # 1 -2 # >2 Color scale for Index in levels Color scale for monthly changes Financial tensions in EM Europe are slowly receding. Russia starts to recover while Turkey tensions continues to relax. Financial tensions in Latam are also declining. Mexico and Brazil the most benefited and Chile the least one. Financial tensions decreasing all over Asia. Philippines outperforms.
  5. 5. Country Risk Quarterly Report –June 2014 5 Section 1 Capital Flows Update • During the 2Q 2014 portfolio reallocation phased out allowing moderate net portfolio inflows back into EMs, this was especially pronounced during the first half of the quarter followed by some moderation thereafter. • The Recovery is being similar in both equity and bond markets. The latter experienced a strong rebound during May. Institutional investors were behind this rebound, while retailers still lagged behind maintaining the reallocation bias from the previous quarter. • Global factors have been responsible for roughly two thirds of the recent flow turnaround. Monetary policy and risk appetite have been key for the surge, yet more recently their contribution has turned negative. USA # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Japan # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Canada # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # UK # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Sweeden # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Norway # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Denmark # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Finland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Germany # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Austria # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Netherlands # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # France # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Belgium # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Italy # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Spain # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Ireland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Portugal # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Greece # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Poland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Czech Rep # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hungary # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Turkey # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Russia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Mexico # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Brazil # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Chile # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Colombia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # PeruPeru # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Argentina # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # China # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # IndiaIndia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Korea # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Thailand # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Indonesia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Philippines # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hong Kong # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Singapore # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # ### Sharp Capital Outflows (below -2 %) ### Strong Capital Outlows (between -1 % and -2 %) ### Moderate Capital Outflows (between 0 and -1 %) 0.50 Moderate Capital Inflows (between 0 and 1 %) 1.20 Strong Capital Inflows (between 1 % and 2 %) 3.00 Booming Capital Inflows (greater than 2 %) WesternEurope 2011 EMEurLATAMAsia 2008 2009 2010 2012 2013 2014 G4 BBVA Country Portfolio Flows Map (Country Flows over total Assets ) Source: BBVA Research
  6. 6. Country Risk Quarterly Report –June 2014 6 Section 2 Sovereign Markets Update Sovereign CDS spreads Source: Datastream and BBVA Research 7773 1177 681 883 933 CDS Spreads in the most advanced markets remained stable during the last quarter at minimum levels. European periphery’s CDS spreads continued decreasing in the last quarter, although an important temporary reversion was seen in Greece during May. EM Europe’s CDS improved across the region, although Russia’s CDS remained tense due to the Ukrainian conflict. Turkey’s CDS has returned to levels previous to the QE-tapering announcement. Latam sovereign CDS spreads tightened in the last excepts in Chile, which remained stable. Colombia, Mexico and Peru were quoting near their historical minimums. Asian sovereigns spreads remained stable or decreased. Indonesia’s CDS has also returned to levels not observed since the QE-tapering announcement. USA UK Norway Sweden Austria Germany France Netherlands Italy Spain Belgium Greece Portugal Ireland Turkey Russia Poland Czech Republic Hungary Bulgaria Romania Croatia Mexico Brazil Chile Colombia Peru Argentina China Korea Thailand Indonesia Malaysia Philippines LATAMAsia 2008 2009 2010 2011 2012 2013 2014 DevelopedMarketsEMEurope D J F M A M # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # 0-50 50- 100 100- 200 200- 300 300- 400 400- 500 500- 600 >600 20.0 70.0 ### ### ### ### ### ### < (-100) (-100)- (-50) (-50) - (-25) (-25) - (-5) (-5) - 5 5-25 25-50 50- 100 >100 ### ### ### ### 0.0 ### 20.0 35.0 ## Changes (last 6 months m/m)
  7. 7. Country Risk Quarterly Report –June 2014 7 Section 2 Sovereign Credit Ratings Update Sovereign Rating Index 2008-2014 Source: BBVA Research by using S&P, Moodys and Fitch Data • Developed Economies: The positive rating cycle for European peripheral countries strengthens as Moody’s upgraded Portugal and Ireland while S&P and Fitch upgraded Spain by one notch. • Emerging Markets: The outlook in Emerging Markets continues to be mixed. In Latam, Brazil was downgraded by S&P, Argentina by Moody’s and Venezuela by Fitch. Russia was downgraded by S&P, meanwhile Romania and Philippines were upgraded also by S&P. Sovereign Rating Index: An index that translates the three important rating agencies ratings letters codes (Moody´s, Standard & Poor´s and Fitch) to numerical positions from 20 (AAA) to default (0). The index shows the average of the three rescaled numerical ratings. 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC D
  8. 8. Country Risk Quarterly Report –June 2014 8 Section 2 Sovereign downgrade Pressures Map Rating Agencies Downgrade Pressure Map (actual rating minus CDS-implied sovereign rating, in notches) Source: BBVA Research Downgrade Pressure Map: The map shows the difference of the current ratings index (numerically scaled from default (0) to AAA (20)) and the implicit ratings according to the Credit Default Swaps. Divergences between official and market implicit ratings continue tightening in developed markets with most of the countries quoting near the official ratings. The gaps between implicit and observed ratings in Europe’s periphery continue decreasing despite the upgrades of Spain, Portugal and Ireland. Downgrade risk is increasing in Croatia, Turkey and Russia, although the pressure is still low. Downgrade pressure in Latin-America continues to be small. We expect it to decrease in the coming months thanks to the decrease in the CDS spreads. Colombia outperforms. The situation is similar in EM Asia, where downgrade pressure is low, but there are growing downgrade pressures in China and to a lesser extent in Indonesia. USA UK Norway Sweden Austria Germany France Netherlands Italy Spain Belgium Greece Portugal Ireland Turkey Russia Poland Czech Rep Hungary Bulgaria Romania Croatia Mexico Brazil Chile Colombia Peru Argentina China Korea Thailand Indonesia Malaysia Philippines 20112010 2014 DevelopedMarketsEMEuropeLATAMAsia 20132008 2009 2012 -6 -3 0 3 6 9 12 USA UK Norway Sweden Austria Germany France Netherlands Italy Spain Belgium Greece Portugal Ireland Turkey Russia Poland Czech Rep Hungary Bulgaria Romania Croatia Mexico Brazil Chile Colombia Peru Argentina China Korea Thailand Indonesia Malaysia Philippines D J F MA M # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Changes Last 6M M / M May 2014 End of Month <-6 -6 to - 3 -3 to 0 0 to 3 3 to 6 >6 ### ### ### 1.0 5.0 7.0 <-0.75 -0.75 to - 0.3 -0.3 to - 0.15 -0.15 to - 0.05 -0.05 to 0.05 0.05 to 0.15 0.15 to 0.3 0.3 to 0.75 >0.7 5 ### ### ### ### 0.0 ### 20.0 35.0 ##
  9. 9. Country Risk Quarterly Report –June 2014 9 Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability. All vulnerability indicators below the risk thresholds. Few changes with respect to 2013 External debt levels and Public debt should be monitored Equity markets are just at the risk threshold raising some valuation concerns Section 3 Regional Risk Update: Core Europe Europe Core Countries: Vulnerability Radar 2014 (Relative position for the Emerging Developed countries. Max Risk=1, Min Risk=0) *Include Austria, Belgium, France, Germany, Denmark, Norway and Sweden Source: BBVA Research Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Europe Core 2014 Europe Core 2013 Risk Thresholds Developed 2014
  10. 10. Country Risk Quarterly Report –June 2014 10 Section 3 Regional Risk Update: Europe Periphery I Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability. Structural public balances, housing prices growth, and private credit growth continue to improve Activity and employment indicators remain weak; Public Debt levels still on the rise The growth in equity markets should call for some warning Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability Europe Periphery I: Vulnerability Radar 2014 (Relative position for the Developed Market countries. Max Risk=1, Min Risk=0) *Include Spain and Italy Source: BBVA Research 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Europe Periphery I 2014 Europe Periphery I 2013 Risk Thresholds Developed 2014
  11. 11. Country Risk Quarterly Report –June 2014 11 Section 3 Regional Risk Update: Europe Periphery II Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability Structural public deficits and private balance sheets gradually improving Public debt and External debt levels are still way above risk levels. Unemployment rate still high Debt Held by non-residents is rising with respect to 2013. High growth in equity markets Europe Periphery II: Vulnerability Radar 2014 (Relative position for the Developed Market countries. Max Risk=1, Min Risk=0) *Include Greece, Ireland and Portugal Source: BBVA Research Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Europe Periphery II 2014 Europe Periphery II 2013 Risk Thresholds Developed 2014
  12. 12. Country Risk Quarterly Report –June 2014 12 Section 3 Regional Risk Update: Emerging Europe Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability Structural public balances and private credit at healthy levels. Most vulnerabilities below risk thresholds Public and external debt levels still higher than risk threshold. GDP growth still low Financial liquidity vulnerable to investor sentiment changes Emerging Europe: Vulnerability Radar 2014 (Relative position for the Emerging Market countries. Max Risk=1, Min Risk=0) Source: BBVA Research Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Emerging Europe 2014 Emerging Europe 2013 Risk Thresholds Emerging 2014
  13. 13. Country Risk Quarterly Report –June 2014 13 Section 3 Regional Risk Update: Latam Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability. Most vulnerability indicators are far from risk thresholds Slight deterioration in financial needs and interest rate-GDP differential Weaker economic growth in some countries. Current Account vulnerability relatively high in some countriesDeveloped: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability Latam: Vulnerability Radar 2014 (Relative position for the Emerging Market countries. Max Risk=1, Min Risk=0) Source: BBVA Research 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Latam 2014 Latam 2013 Risk Thresholds Emerging 2014
  14. 14. Country Risk Quarterly Report –June 2014 14 Section 3 Regional Risk Update: Asia Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability Activity indicators still among the most solid among Emerging Markets Private Credit and housing prices growth risks keep on rising in China Structural fiscal deficits and public debt level above the risk thresholds in some countries Emerging Asia: Vulnerability Radar 2014 (all data for 2012, Relative position for the Emerging Market countries. Max Risk=1, Min Risk=0) Source: BBVA Research Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Emerging Asia 2014 Emerging Asia 2013 Risk Thresholds Emerging 2014
  15. 15. Country Risk Quarterly Report –June 2014 15 0.0 50.0 100.0 150.0 200.0 250.0 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Corporate Sector Debt 2014 (% GDP, excluding bond issuances) Source: BBVA Research and BIS -10.0 10.0 30.0 50.0 70.0 90.0 110.0 130.0 150.0 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Household Debt 2014 (% GDP) Source: BBVA Research and BIS 0 50 100 150 200 250 300 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand External Debt 2014 (% GDP) Source: BBVA Research and IMF 0 20 40 60 80 100 120 140 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Gross Public Debt 2014 (% GDP) Source: BBVA Research and IMF Risk Thresholds Section 3 Public and Private Debt Chart Gallery 242 174 374 305 1017
  16. 16. Country Risk Quarterly Report –June 2014 16 Private credit colour map (1999-2014 Q1) (yearly change of private credit-to-GDP ratio (Y/Y) Source: BBVA Research and Haver Credit-to-GDP ratio continues to grow rapidly in the US, although its pace is decelerating in the last quarter. The de-leveraging process is stronger in UK, Denmark and Ireland and in the rest of the countries is stabilizing. In EM Europe, credit growth is losing steam in Turkey and Russia, although it is still high in the former. Meanwhile, de-leveraging continues in the rest of the countries or leverage is stagnant. Private credit growth is basically stagnant in Latin America. In most of the countries leverage is not growing, with the exception of Brazil, where it has recovered strength in the first quarter. In China, credit ratio growth has accelerated in the first quarter after a halt in the previous quarter. There are no signs of excess credit growth in the rest of the countries. Section 3 Private Credit Pulse US # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Japan # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Canada # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # UK # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Denmark # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Netherlands # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Germany # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # France # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Italy # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Belgium # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Greece # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Spain # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Ireland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Portugal # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Iceland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Turkey # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Poland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Czech Rep # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hungary # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Romania # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Russia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Bulgaria # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Croatia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Mexico # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Brazil # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Chile # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Colombia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Argentina # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Peru # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Uruguay # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # China # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Korea # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Thailand # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # India # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Indonesia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Malaysia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Philippines # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hong Kong # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Singapore # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # ### ### ### ### ### ### … De-leveraging: Credit/GDP growth declining Non Available Booming: Credit/GDP growth is higher than 5% Excess Credit Growth: Credit/GDP growth between 3%-5% High Growth: Credit/GDP growth between 2%-3% Mild Growth: Credit/GDP growth between 1%-2% Stagnant: Credit/GDP is declining betwen 0%-1% WesternEuropeEuropeEMLATAMAsia 20102003 2011 2012 2013 2014 G4 2004 2005 2006 2007 2008 20091999 2000 2001 2002 Q2 Q3 Q4 Q1 1.3 4.3 4.5 1.3 -0.8 1.2 1.0 0.1 1.1 0.5 -0.5 -0.8 -3.9 -2.9 -5.4 -6.0 -1.2 0.4 -5.5 -5.5 0.4 -2.3 -7.7 -0.3 -0.6 -5.0 -1.1 -0.7 0.1 -0.7 -2.6 0.5 -1.0 -0.5 -1.0 -1.8 0.4 -1.3 -2.5 0.7 0.7 0.5 0.6 -0.4 -4.1 -4.3 -4.7 -4.0 -4.5 -5.3 -5.5 -8.7 -0.9 -3.5 -3.7 -4.8 0.0 0.0 0.0 0.0 4.1 2.8 1.5 0.9 0.8 0.2 -0.5 0.6 0.3 0.2 -0.3 0.4 -2.1 -0.7 -1.9 -1.9 -0.4 -0.7 -1.7 -0.8 1.6 2.8 0.6 1.4 0.3 0.6 0.0 -0.2 -1.3 -2.7 -2.7 -2.7 0.7 0.6 1.3 0.1 1.3 0.4 0.2 2.0 0.7 3.6 1.6 0.1 1.2 0.4 0.7 0.2 0.3 0.4 0.7 -0.4 1.5 0.8 0.8 0.3 1.9 0.3 1.0 1.0 2.0 1.5 -1.2 7.8 0.9 -0.1 -0.4 0.3 1.9 1.0 3.0 -15.6 0.1 0.7 -1.8 0.0 0.3 1.0 0.4 -1.2 2.4 1.1 -0.6 -0.1 0.9 0.4 1.4 -0.4 11.9 7.1 0.0 2.3 0.9 0.4 1.4 -12.5 6.0 Q/Q growth > 5% 4.5 Q/Q growth between 3 and 5% 2.5 Q/Q growth between 1.5% and 3% 1.0 Q/Q growth between 0.5% and 1.5% 0.2 Q/Q growth between -0.5% and 0.5% -1.0 Q/Q growth between -0.5% and - 1.5% ## Q/Q growth between -1.5% and -3% ## Q/Q growth between -3% and -5% -6.0 Q/Q growth < -5% Q/Q Growth Last four quarters up until Q1-2014
  17. 17. Country Risk Quarterly Report –June 2014 17 Real housing prices colour map (1999-2014 Q1) (yearly change of real housing prices Y/Y) Source: BBVA Research, BIS and Global Property Guide US real housing prices have now been growing fast for more than a year. Real growth in UK is accelerating. Europe’s correction is still alive with some positive growth in the Denmark. Housing prices are still growing fast in Turkey and Hungary, meanwhile prices are stagnant or declining in the rest of the countries. In Latam, real housing prices continue to grow faster in Colombia and Peru, although moderating in the latter. Housing prices growth does not seem to be slowing down in China. Growth is accelerating in Philippines and it does not have a clear tendency in the rest of the region. Section 3 Real Housing Prices Pulse US # Japan # Canada # UK # Denmark # Netherlands # Germany # France # Italy # Belgium # Greece # Spain # Ireland # Portugal # Iceland # Turkey Poland Czech Rep Hungary # Romania Russia # Bulgaria # Croatia # Mexico # Brazil # Chile # Colombia # Argentina # Peru # Uruguay # China # Korea # Thailand # India Indonesia Malaysia # Philippines Hong Kong # Singapore # 9 7 4 3 0.5 -2 2011 2012 2013 2014 G4 2004 2005 2006 2007 2008 20091999 2000 2001 2002 EuropaOccidentalEuropaEmergenteLATAMAsia 20102003 De-Leveraging: House prices are declining Non Available Data Booming: Real House prices growth higher than 8% Excess Growth: Real House Prices Growth between 5% and 8% High Growth: Real House Prices growth between 3%-5% Mild Growth: Real House prices growth between 1%-3% Stagnant: Real House Prices growth between 0% and 1% Q2 Q3 Q4 Q1 1.7 1.5 1.5 1.6 -0.1 0.2 0.4 -0.9 -2.2 -1.1 -1.9 1.9 0.7 1.0 1.9 1.9 0.0 -0.1 0.7 0.9 -3.0 -0.1 0.2 0.3 2.8 1.0 -0.1 -1.5 -0.7 0.7 -1.0 -1.2 -1.8 -1.5 -0.7 -0.2 -0.1 1.9 -1.0 -1.0 -4.2 0.7 -3.5 -0.1 -1.7 -0.4 -2.5 0.0 1.8 4.0 3.0 -1.3 -5.7 -4.4 -3.8 -1.8 2.8 1.0 0.8 3.7 2.5 1.6 -0.1 1.4 -3.4 1.7 0.4 0.0 0.1 1.1 1.2 0.4 0.6 0.9 4.4 2.0 -1.3 -2.4 3.0 0.0 -1.5 -1.1 -0.9 -0.9 -1.0 -4.8 -0.5 -0.3 -6.4 -1.0 0.1 0.1 1.8 0.7 -1.6 0.3 0.9 1.1 0.8 -0.7 2.6 -0.1 2.3 0.4 3.1 1.1 1.3 1.3 -2.7 -2.7 -2.7 -2.7 8.8 1.0 -3.7 0.0 0.0 0.0 0.0 2.9 1.5 0.5 1.6 0.1 -0.5 0.4 -0.4 0.4 3.5 -0.2 -0.5 -3.8 -6.9 0.4 0.4 1.3 -2.3 1.3 1.5 3.1 2.6 -2.0 1.3 0.8 5.0 4.7 4.7 0.4 2.6 -2.8 -3.1 2.2 -0.7 -1.8 -1.5 6.0 Q/Q growth > 3.5% 4.5 Q/Q growth between 2% and 3.5% 2.5 Q/Q growth between 1% and 2% 1.0 Q/Q growth between 0.5% and 1% 0.2 Q/Q growth between -0.5% and 0.5% -1.0 Q/Q growth between -0.5% and - 1% -2.5 Q/Q growth between -1% and -2% -4.5 Q/Q growth between -2% and -3.5% -6.0 Q/Q growth < -3.5% Q/Q Growth Last four quarters up until Q1-2014
  18. 18. Country Risk Quarterly Report –June 2014 18 Section 3 Regional Risk Update: Western Europe Latam: Sovereign Rating (Rating agencies and BBVA scores) Source: Standard & Poors, Moody´s, Fitch and BBVA Research Emerging Asia: Sovereign Rating (Rating agencies and BBVA scores) Source: Standard & Poors, Moody´s, Fitch and BBVA Research EM Europe: Sovereign Rating (Rating agencies and BBVA scores) Source: Standard & Poors, Moody´s, Fitch and BBVA Research Europe Core: Sovereign Rating (Rating agencies and BBVA scores +-1std dev) Source: Standard & Poors, Moody´s, Fitch and BBVA Research Europe Periphery I: Sovereign Rating (Rating agencies and BBVA scores +-1 std dev) Source: Standard & Poors, Moody´s, Fitch and BBVA Research Europe Periphery II: Sovereign Rating (Rating agencies and BBVA scores +.1 std dev) Source: Standard & Poors, Moody´s, Fitch and BBVA Research 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rating Agencies BBVA Models Average AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC
  19. 19. Country Risk Quarterly Report –June 2014 19 Section 3 Regional Risk: CD Swaps Update Europe Periphery II: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) Europe Periphery I: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) Europe Core: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) EM Asia: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) LATAM: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) EM Europe: CD Swap 5 year (equilibrium: average of 4 alternative models + 0.5 Standard deviation) 0 20 40 60 80 100 120 140 160 0 20 40 60 80 100 120 140 160 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap 0 100 200 300 400 500 600 0 100 200 300 400 500 600 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap 0 200 400 600 800 1000 1200 1400 1600 0 200 400 600 800 1000 1200 1400 1600 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap 0 50 100 150 200 250 300 350 400 450 500 0 50 100 150 200 250 300 350 400 450 500 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap 0 50 100 150 200 250 300 350 400 450 500 0 50 100 150 200 250 300 350 400 450 500 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap 0 50 100 150 200 250 300 350 400 450 500 0 50 100 150 200 250 300 350 400 450 500 2007 2008 2009 2010 2011 2012 2013 2014 CD Swap Equilibrium CD Swap
  20. 20. Country Risk Quarterly Report –June 2014 20 Vulnerability Indicators* 2014: Developed Countries Source: BBVA Research, Haver, BIS, IMF and World Bank Section 3 Vulnerability Indicators: Developed Economies *Vulnerability Indicators: (1) % GDP (2) Deviation from 4 years average (3) % of total debt (4) % year on year (5) % of Total Labor Force (6) Financial System Credit to Deposit (7) Index by World Bank Governance Indicators Fiscal Sustainability External Sustainability Liquidity Management Macroeconomic Performance Credit and housing Private debt Institutional Structural Primary Balance (1) Interest rate GDP growth differential 2013-17 Gross Public Debt (1) Current Account Balance (1) External Debt (1) RER Appreciati on (2) Gross Financial Needs (1) Short Term Public Debt (3) Debt Held by non Residents (3) GDP Growth (4) Consumer prices (4) Unemploym ent Rate (5) Private Credit to GDP Growth (4) Real Housing Prices Growth (4) Equity Markets Growth (4) Househol d Debt (1) NF Corporate Debt (1) Financial liquidity (6) WB Political Stability (7) WB Control Corruption (7) WB Rule of Law (7) United States -1.2 -1.1 73 -1.9 99 1.2 24 18 34 2.5 1.8 6.6 11.5 6.2 12.9 77 81 58 -0.6 -1.4 -1.6 Canada -1.8 0.0 86 -3.5 72 -8.4 17 13 25 1.5 1.5 7.3 0.3 -0.3 12.4 95 57 108 -1.1 -1.9 -1.8 Japan -6.0 -1.4 242 0.1 54 -20.8 58 49 8 1.1 2.8 3.6 1.5 -3.3 19.6 66 149 48 -0.9 -1.6 -1.3 Australia -1.6 -0.6 29 -2.4 82 -3.9 6 3 55 2.6 2.3 5.9 2.1 4.7 8.5 112 49 122 -1.0 -2.0 -1.7 Korea 1.1 -1.6 35 5.6 30 8.8 1 3 14 3.7 1.8 3.2 0.7 -0.3 -1.0 80 104 130 -0.2 -0.5 -1.0 Norway -8.4 -2.0 34 8.5 143 -3.3 -7 4 42 1.9 2.0 3.3 -0.8 2.5 18.2 87 130 110 -1.3 -2.2 -1.9 Sweden -1.2 -1.4 42 5.9 193 -2.0 5 4 54 2.1 0.4 7.8 0.3 -2.0 13.6 85 88 298 -1.2 -2.3 -1.9 Denmark 0.1 1.1 48 6.0 185 1.2 10 7 41 1.5 1.5 5.8 -6.3 1.6 31.4 137 89 395 -0.9 -2.4 -1.9 Finland -0.6 -1.0 60 6.0 185 3.1 8 6 92 1.5 1.5 5.8 1.7 -3.1 19.8 67 92 156 -1.4 -2.2 -1.9 UK -1.8 -0.2 95 -2.8 374 6.1 12 6 33 2.8 1.9 3.2 -18.2 5.4 2.9 91 106 103 -0.4 -1.6 -1.7 Austria 0.1 0.0 75 3.4 204 3.0 9 6 83 1.5 1.8 4.9 -3.4 2.2 7.3 55 91 141 -1.3 -1.3 -1.8 France -0.3 -0.5 96 -1.7 208 1.1 17 13 61 0.9 1.1 9.9 -2.6 -2.2 17.7 55 153 137 -0.6 -1.4 -1.4 Germany 2.5 0.3 76 6.7 150 2.0 7 7 60 1.8 1.3 6.6 -7.5 2.1 22.6 57 90 64 -0.8 -1.8 -1.6 Netherlands 1.2 0.4 76 9.5 305 3.5 12 9 56 0.8 0.8 8.9 -9.9 -2.6 15.8 124 93 115 -1.2 -2.1 -1.8 Belgium 1.3 1.1 101 -0.9 243 1.4 19 16 60 1.2 1.0 8.6 -2.8 -0.3 26.3 57 197 72 -0.9 -1.6 -1.4 Italy 3.9 2.2 135 1.1 124 1.7 28 26 36 0.7 0.7 12.9 -4.3 -4.3 41.4 45 115 86 -0.5 0.0 -0.4 Spain -1.0 2.5 85 1.4 185 1.3 21 14 37 1.1 0.3 25.0 -17.1 -4.6 30.6 77 175 129 0.0 -1.0 -1.0 Ireland 0.7 0.8 121 4.3 1017 0.6 11 5 66 1.7 0.6 11.4 -23.9 7.4 26.2 102 282 113 -0.9 -1.4 -1.7 Portugal 2.3 1.3 127 0.8 247 0.1 21 17 65 1.2 0.2 15.3 -12.8 -0.9 27.7 86 153 148 -0.7 -0.9 -1.0 Greece 5.4 1.0 174 1.0 228 -1.3 25 17 80 -0.3 -0.4 27.0 1.4 -7.1 53.7 66 83 112 0.2 0.3 -0.4
  21. 21. Country Risk Quarterly Report –June 2014 21 Section 3 Vulnerability Indicators: Emerging Economies *Vulnerability Indicators: (1) % GDP (2) Deviation from 4 years average (3) % of total debt (4) % year on year (5) % of Total Labor Force (6) Financial System Credit to Deposit (7) Index by World Bank Governance Indicators Vulnerability Indicators* 2014: Emerging Countries Source: BBVA Research, Haver, BIS, IMF and World Bank Fiscal Sustainability External Sustainability Liquidity Management Macroeconomic Performance Credit and housing Private debt Institutional Structural Primary Balance (1) Interest rate GDP growth differential 2013-17 Gross Public Debt (1) Current Account Balance (1) External Debt (1) RER Appreciati on (2) Gross Financial Needs (1) Reserves to Short Term External Debt (3) Debt Held by non Residents (3) GDP Growth (4) Consumer prices (4) Unemployme nt Rate (5) Private Credit to GDP Growth (4) Real Housing Prices Growth (4) Equity Markets Growth (4) Household Debt (1) NF Corporate Debt (1) Financial liquidity (6) WB Political Stability (7) WB Control Corruption (7) WB Rule of Law (7) Bulgaria -0.1 1.9 19 1.9 96 0.2 2 1.5 44 1.7 -0.4 12.4 0.7 -6.5 56.2 23 94 97 -0.3 0.2 0.1 Czech Rep -0.3 0.1 49 -1.7 55 -6.7 12 8 32 2.6 1.0 7.6 0.6 2.8 4.5 30 49 82 -1.0 -0.2 -1.0 Croatia -2.8 1.7 70 -0.8 105 -0.4 11 2.3 34 -0.4 0.5 20.8 -2.8 -14.6 -12.4 39 36 106 -0.6 0.0 -0.2 Hungary 1.8 1.6 80 1.6 148 -3.8 20 1.5 63 2.4 0.9 8.8 -4.7 7.9 -1.8 30 90 143 -0.7 -0.3 -0.6 Poland -0.2 -0.2 50 -1.3 70 0.8 9 1.2 53 2.9 1.5 12.9 1.0 -1.3 16.0 36 84 103 -1.0 -0.6 -0.7 Romania 0.4 -0.9 38 -1.4 71 2.4 10 1.9 56 2.6 2.2 5.0 -3.6 -0.8 12.2 21 49 105 -0.1 0.3 0.0 Russia 0.5 -2.1 15 1.6 39 -5.1 2 5.0 24 0.3 5.9 6.8 6.5 -6.0 -4.8 15 35 120 0.8 1.0 0.8 Turkey 1.2 2.4 35 -5.8 46 0.6 26 1.0 31 1.5 7.9 9.3 9.4 5.3 -18.8 15 37 126 1.2 -0.2 0.0 Argentina -0.6 -14.6 46 -0.8 31 -27.2 11 1.2 36 -0.5 36.5 8.1 0.9 1.0 88.5 9 -- 76 -0.1 0.5 0.7 Brazil 2.0 3.0 69 -3.7 22 -4.3 19 10.9 5 2.0 6.2 5.4 3.8 1.9 -10.5 26 37 133 -0.1 0.1 0.1 Chile -0.5 0.1 13 -3.7 49 -7.3 1 2.5 17 3.4 3.3 5.7 6.0 5.2 -14.9 32 52 180 -0.3 -1.6 -1.4 Colombia 0.1 -0.1 36 -3.3 24 -4.7 4 3.8 30 4.7 3.4 9.5 2.6 8.3 -2.2 17 25 180 1.4 0.4 0.4 Mexico -1.4 -0.1 48 -1.6 30 2.4 10 2.3 37 2.5 3.7 5.1 2.6 1.3 -6.8 16 29 76 0.7 0.4 0.6 Peru 0.5 -2.2 19 -5.1 31 7.2 1 10.8 60 5.2 3.0 5.9 3.5 14.4 -28.0 12 22 89 0.9 0.4 0.6 China -0.4 -6.3 56 2.2 7 6.1 6 6.4 … 7.2 2.6 4.0 10.1 6.7 -19.1 34 85 160 0.5 0.5 0.5 India -3.3 -4.0 68 -2.4 21 -8.1 12 3.0 8 5.2 8.5 11.8 -0.9 -9.4 18.8 10 44 79 1.2 0.6 0.1 Indonesia -0.9 -4.1 27 -2.7 27 -8.6 4 2.0 59 5.4 6.3 6.0 0.5 1.7 -3.5 18 18 95 0.6 0.7 0.6 Malaysia -2.1 -2.1 57 4.1 38 -0.9 10 2.7 30 5.2 3.3 3.1 2.8 4.9 10.6 96 -- 91 0.0 -0.3 -0.5 Philippines 0.5 -2.1 39 4.0 20 2.5 8 9.2 … 6.5 4.4 7.5 2.4 13.6 -6.1 2 29 57 1.2 0.6 0.5 Thailand -2.5 -4.4 48 2.7 38 0.8 9 2.2 13 2.5 2.3 0.4 -9.8 3.0 -11.8 72 53 99 1.2 0.3 0.2
  22. 22. Country Risk Quarterly Report –June 2014 22 Annex Methodology: Indicators and Maps • Financial Stress Map: It stresses levels of according to the normalized time series movements. Higher positive standard units (1.5 or higher) stand for high levels of stress (dark blue) and lower standard deviations (-1.5 or below) stand for lower level of market stress (lighter colors) • Sovereign Rating Index: An index that translates the three important rating agencies ratings letters codes (Moody’s, Standard & Poor’s and Fitch) to numerical positions from 20 (AAA) to default (0) . The index shows the average of the three rescaled numerical ratings • Sovereign CD Swaps Map: It shows a colour map with 6 different ranges of CD Swaps quotes (darker >500, 300 to 500, 200 to 300, 100 to 200, 50 to 100 and the lighter below 50 bps) • Downgrade Pressure Map: The map shows the difference of the current ratings index (numerically scaled from default (0) to AAA (20)) and the implicit ratings according to the Credit Default Swaps. We calculate implicit probabilities of default (PDs) from the observed CDS and the estimated equilibrium spread. For the computation of these PDs we follow a standard methodology as the described in Chan- Lau (2006) and we assume a constant Loss Given Default of 0.6 (Recovery Rate equal to 0.4) for all the countries in the sample. We use the resulting PDs in a cluster analysis to classify each country at every point in time in one of 20 different categories (ratings) to emulate the same 20 categories used by the Rating Agencies. The map and the graph plot the difference between the actual sovereign rating index and the CDS-implied sovereign rating, in notches. Higher positives differences account for Downgrade potential pressures and negative differences account for Upgrade potential. We consider the +-3 notches area as the Neutral one • Vulnerability Radars & Risk Thresholds Map: — A Vulnerability Radar shows a static and comparative vulnerability for different countries. For this we assigned several dimensions of vulnerabilities each of them represented by three vulnerability indicators. The dimensions included are: Macroeconomics, Fiscal, Liquidity, External, Excess Credit and Assets, Private Balance Sheets and Institutional. Once the indicators are compiled we reorder the countries in percentiles from 0 (lower ratio among the countries) to 1 (maximum vulnerabilities) relative to its group (Developed Economies or Emerging Markets). Furthermore, Inner positions (near 0) in the radar shows lower vulnerability meanwhile outer positions (near 1) stand for higher vulnerability. Besides we compare the positions of the country with risk thresholds in red whose values have been computed according to our own analysis or empirical literature — The Distance to Risk Map: Shows in different colours a summary table of vulnerability radars. Darker colours stand for indicators above risk thresholds (developed or emerging depending the country). Lighter colours reflect safe values in the sense of a high distance to the risk thresholds. Dimensions are computed as the geometric average of the three indicators included in each of the dimensions
  23. 23. Country Risk Quarterly Report –June 2014 23 Risk Thresholds Table Macroeconomics GDP 1.5 3.0 Lower BBVA Research Inflation 4.0 10.0 Higher BBVA Research Unemployment 10.0 10.0 Higher BBVA Research Fiscal Vulnerability Ciclically Adjusted Deficit ("Strutural Deficit") -4.2 -0.5 Lower Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 Expected Interest rate GDP growth diferential 5 years ahead 3.6 1.1 Higher Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 Gross Public Debt 73.0 43.0 Higher Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 Liquidity Problems Gross Financial Needs 17.0 21.0 Higher Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 Debt Held by Non Residents 84.0 40.0 Higher Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/101 Short Term Debt Pressure Publi Short Term Debt as % of Total Publi Debt (Developed) 9.1 Higher Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 Reserves to Short term debt (Emerging) 0.6 Lower Baldacci et Al (2011). Assesing Fiscal Stress. IMF WP 11/100 External Vulnerability Current Account Balance (% GDP) 4.0 6.0 Lower BBVA Research External Debt (% GDP) 200.0 60.0 Higher BBVA Research Real Exchange Rate (Deviation from 4 yr average) 5.0 10.0 Higher EU Commission (2012) and BBVA Research Private Balance Sheets Household Debt (% GDP) 84.0 84.0 Higher Chechetti et al (2011). "The real effects of debt". BIS Working Paper 352 & EU Comission (2012) Non Financial Corporate Debt (% GDP) 90.0 90.0 Higher Chechetti et al (2011). "The real effects of debt". BIS Working Paper 352 & EU Comission (2013) Financial liquidity (Credit/Deposits) 130.0 130.0 Higher EU Commission (2012) and BBVA Research Excess Credit and Assets Private Credit to GDP (annual Change) 8.0 8.0 Higher IMF Global Financial Stability Report Real Housing Prices growth (% yoy) 8.0 8.0 Higher IMF Global Financial Stability Report Equity growth (% yoy) 20.0 20.0 Higher IMF Global Financial Stability Report Institutions Political Stability 0.2 (9th percentil) -1.0 (8th percentil) Lower World Bank Governance Indicators Control of Corruption 0.6 (9th percentil) -0.7 (8th percentil ) Lower World Bank Governance Indicators Rule of Law 0.6 (8th percentil) -0.6 (8 th percentil) Lower World Bank Governance Indicators Vulnerability Dimensions Risk Thresholds Developed Economies Risk Thresholds Emerging Economies Risk Direction Research Annex Methodology: Indicators and Maps
  24. 24. Country Risk Quarterly Report –June 2014 24 Annex Methodology: Models and BBVA country risk • BBVA Research Sovereign Ratings Methodology: We compute our sovereigns ratings by averaging four alternatives sovereign rating models developed at BBVA research: - Credit Default Swaps Equilibrium Panel Data Models: This model estimates actual and forecasts equilibrium levels of CD Swaps for 40 developed and emerging markets. The long run equilibrium CD Swaps are the result of four alternative panel data models. The average of these equilibrium values are finally are finally converted to a 20 scale sovereign rating scale. The CD Swaps equilibrium are calculated by a weighting average of the four CD Swaps equilibrium model estimations (30% for the linear and quadratic models and 15% for each expectation model to correct for expectations uncertainty). The weighted average is rounded by 0.5 standard deviation confidence bands. The models are the following - Linear Model (35% weight): Panel Data Model with fixed effects including Global Risk Aversion, GDP growth, Inflation, Public Debt and institutional index for developed economies and adding External debt and Reserves to Imports for Emerging Markets - Quadratic Model (35% weight): It is similar to the Linear Panel Data Model but including a quadratic term for public (Developed and emerging) and external debt (Emerging) - Expectations Model (15% weight): It is similar to the linear model but public and external debt account for one year expected values - Quadratic Expectations Model (15% weight): Similar to the expectations model but including quadratic terms of public debt and external debt expectations - Sovereign Rating Panel Data Ordered Probit with Fixed Effects Model: The model estimates a sovereign rating index (a 20 numerical scale index of the three sovereign rating agencies) through ordered probit panel data techniques. This model takes into account idiosyncratic fundamental stock and flows sustainability ratios allowing for fixed effects , thus including idiosyncratic country specific effects - Sovereign Rating Panel Data Ordered Probit without Fixed Effects Model: The model estimates a sovereign rating index (a 20 numerical scale index of the three sovereign rating agencies) through ordered probit panel data techniques. This model takes into account idiosyncratic fundamental stock and flows sustainability but fixed effects are not included, thus all countries are treated symmetrically without including the country specific long run fixed effects - Sovereign Rating Individual OLS models: These models estimate the sovereign rating index (a 20 numerical scale index of the three sovereign rating agencies) individually. Furthermore , parameters for the different vulnerability indicators are estimated taken into account the own history of the country independent of the rest of the countries
  25. 25. Country Risk Quarterly Report –June 2014 25 BBVA Research Sovereign Ratings Methodology Diagram Source: BBVA Research BBVA Research Sovereign Ratings (100%) Equilibrium CD Swaps Models (25%) Panel Data Model Fixed Effects (25%) Panel Data Model NO Fixed Effects (25%) Individual OLS Models (25%) Panel Data Linear Model (35%) Panel Data Quadratic Model (35%) Panel Data Expectations Model (15%) Panel Data Quadratic & Expectations Model (15%) Annex Methodology: Models and BBVA country risk
  26. 26. Country Risk Quarterly Report –June 2014 26 This report has been produced by Emerging Markets Unit, Cross-Country Analysis Team Chief Economist for Emerging Markets Alicia García-Herrero +852 2582 3281 alicia.garcia-herrero@bbva.com.hk Chief Economist, Cross-Country Emerging Markets Analysis Álvaro Ortiz Vidal-Abarca +34 630 144 485 alvaro.ortiz@bbva.com Gonzalo de Cadenas +34 606 001 949 gonzalo.decadenas@bbva.com David Martínez Turégano +34 690 845 429 dmartinezt@bbva.com Alfonso Ugarte Ruiz + 34 91 537 37 35 alfonso.ugarte@bbva.com With the assistance of: Carrie Liu carrie.liu@bbva.com Edward Wu edward.wu@bbva.com
  27. 27. Country Risk Quarterly Report –June 2014 27 BBVA Research Group Chief Economist Jorge Sicilia Emerging Economies: Alicia García-Herrero alicia.garcia-herrero@bbva.com.hk Cross-Country Emerging Markets Analysis Álvaro Ortiz Vidal-Abarca alvaro.ortiz@bbva.com Asia Stephen Schwartz stephen.schwartz@bbva.com.hk Mexico Carlos Serrano carlos.serrano@bbva.com Latam Coordination Juan Ruiz juan.ruiz@bbva.com Argentina Gloria Sorensen gsorensen@bbva.com Chile Jorge Selaive jselaive@bbva.com Colombia Juana Téllez juana.tellez@bbva.com Peru Hugo Perea hperea@bbva.com Venezuela Oswaldo López oswaldo.lopez@bbva.com Developed Economies: Rafael Doménech r.domenech@bbva.com Spain Miguel Cardoso miguel.cardoso@bbva.com Europe Miguel Jiménez mjimenezg@bbva.com US Nathaniel Karp nathaniel.karp@bbvacompass.com Global Areas: Financial Scenarios Sonsoles Castillo s.castillo@bbva.com Economic Scenarios Julián Cubero juan.cubero@bbva.com Innovation & Processes Clara Barrabés clara.barrabes@bbva.com Financial Systems & Regulation: Santiago Fernández de Lis sfernandezdelis@grupobbva.com Financial Systems Ana Rubio arubiog@bbva.com Financial Inclusion David Tuesta david.tuesta@bbva.com Regulation and Public Policies María Abascal maria.abascal@bbva.com Recovery and Resolution Policy José Carlos Pardo josecarlos.pardo@bbva.com Global Regulatory Coordination Matías Viola matias.viola@bbva.com Contact details: BBVA Research Paseo Castellana, 81 – 7th floor 28046 Madrid (Spain) Tel. + 34 91 374 60 00 and + 34 91 537 70 00 Fax. +34 91 374 30 25 bbvaresearch@bbva.com www.bbvaresearch.com BBVA Research Asia 43/F Two International Finance Centre 8 Finance Street Central Hong Kong Tel: +852 2582 3111 E-mail: research.emergingmarkets@bbva.com.hk

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