NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases its Renminbi Devaluation, Trade Wars, and Global Liquidity research piece, in the wake of the recent escalation in the U.S.-China trade conflict, as well as the Renminbi (CNY)-related devaluation past its psychological threshold of CNY7 to the U.S. dollar.
KBRA notes that, perhaps equally as dynamic, are the effects that recent trends could have on global liquidity as global central banks’ monetary policies are likely to turn more accommodative in response. For those countries where debt has grown rapidly over the past several years, these trends could be destabilizing over the medium to long term as the incentive to borrow rises. As a credit rating agency, KBRA is closely monitoring these dynamics as we surveil our growing international exposure. KBRA’s Sovereign Group manages a portfolio of over 60 sovereign credit views on countries across the globe, which support our international rating activities across all asset classes.
The main takeaways of this research piece include:
- The escalation of the trade conflicts could undermine risk-taking sentiment among U.S. businesses, individuals, or investors, leading to a drag on the U.S. and global economies.
- The depreciation of the Renminbi could reduce, to some extent, balance of payments pressures in China but does not offset the country’s slowing growth and elevated leverage risks.
- Global monetary policy relaxation is even more firmly on the horizon across emerging and advanced economies.
- Lower debt servicing costs help debtors, although the rising incentive to accumulate leverage increases debt sustainability risks.
To view the report, click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.