Organisation

Its risk score is still improving, but it should not be ignored the borrower is still an acute-risk, tier-five option, a year on from the elections.

The borrower is on shakier ground as its ability to refinance debt is questioned.

The fall in the currency could have repercussions for investor safety, extending the downward trend in its country risk score.

Investor prospects in Portugal, Ireland, Spain and even Greece have brightened this year, but Italy could still put a damper on the recovery.

Political turmoil is heightening investor risk and will likely narrow the risk score differential with Japan, but a strong macro-fiscal situation should not be overlooked.

Investor risk has been rising this year with fears over Brexit, China, the oil price slump, eurozone debts and global conflict weighing heavily on portfolio decision-making. The shock impact of the Republican victory has made the picture even murkier and sent assets into a tailspin.

The October elections did not deliver the shock investors were bracing themselves for when anti-government protests took place earlier in the year – easing the risks and endorsing Iceland’s credentials for a credit rating upgrade based on its improving macro-fiscal profile.

Like most major regulatory changes, the introduction of new margin, collateral and capital requirements for non-cleared OTC derivatives has been subject to delay as regulators finalise the details and dealers are struggling with their implementation. With its global start date already having been delayed from Q3 2015 to 2016, Europe is now pushing back further, most likely to Q2 1017.

Although the CIS is learning to adjust to low oil prices, the recovery is slow, the political risks complex, and with fiscal deficits widening living standards are failing to keep pace with other emerging markets.

Its risk score plunged the most of any country worldwide in Euromoney’s country risk survey in Q3 2016, highlighting how eurozone investors must remain on their toes.

The country is gradually improving its position in the ECR rankings – unlike several of its neighbours.

The calming of the political shock of Brexit, with oil prices now receiving Opec support, is preventing global risks from worsening. Yet with a referendum looming in Italy, elections in the US and Europe to come, not to mention frail banks and several countries mired in difficulties, it might be the calm before another global storm.