S&P warns of looming debt cliff in Emerging Markets

S&P Global Ratings warned of sovereign ratings downgrades in emerging markets as public companies grapple with rising debt loads.

In a report published on Wednesday, S&P outlined the grave situation governments in emerging markets far with the need to bail out state-owned businesses, which will cause a decline of revenues and pressies on external accounts.

"Contingent liabilities crystallizing on a government’s balance sheet have so far not played an important role in the negative ratings trajectory of EM sovereigns," said Moritz Kraemer, global sovereign chief ratings officer at S&P in Frankfurt. "This is not to say that they do not matter. On the contrary, they do -- and they materialize rather frequently."

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