Despite lots of talk about sovereign debt default in 2010, IHS Global Insight said Monday there is very little chance of major problems over the coming year.
Some of the highlights:
No default for Greece or euro zone. Peer pressure within the euro zone will mean Greece will rectify its fiscal position however painful that process is for investors.
Iceland is Junk. With the president refusing to pay back billions owed to the UK and Netherlands expect all credit agencies to rate Iceland as speculative grade.
No downgrade for US debt. Debt-to-GDP level is going to double but the rise in government debt not yet sufficient to trigger a negative outlook, let alone a downgrade.
Brazil to lead sovereign turnaround. Having its rating upgraded in the second half of 2009 Brazil will continue to as the economy continues to outperform the developed world. New oil finds will drive this trend going forward as Brazil gets “Net creditor nation status.”
Dubai risk is overstated. Fears over the emirate have been overdone given oil rich neighbor Abu Dhabi will continue to support the government.
Poland the rising star of Eastern Europe. Poland did not enter recession and with its currency moving lower and its government implementing market-oriented fiscal policies the countries debt could be upgraded.