Sponsored Content

With policy and regulation, businesses, consumers, investors, and technology all pushing sustainable finance rapidly into the mainstream, HSBC discusses the market’s outlook and opportunities.

The funding landscape for UK-based corporates has undergone a radical transformation since the financial crisis of 2008, driven by macro-economic changes and a growing sophistication in the way that companies finance their activities.

Experts are beginning to feel more confident about Russia’s prospects, and its credit ratings will ultimately reflect this.

Bond markets are performing well and proving safe from external political and macroeconomic factors. Borrowers are therefore likely to continue moving more of their funding into the bond markets. Societe Generale CIB suggests 10 things that issuers from Central and Eastern Europe (CEE) should bear in mind and emphasise to capital markets investors, if they want to negotiate the best financing terms.

Over the past 30 years, derivatives have been a force for good. Their practical application allows for more risk mitigation, yield enhancement and contingency planning, making financial markets work better.

Since April this year, the ECB has reduced its monthly QE purchases from €80bn to €60bn. This did not have much direct effect on the covered bond market though; the ECB has predominantly scaled back the purchases of government bonds, with spreads which already sufficiently reflected this. On the covered bond side we do not expect to see any strategic changes in buying behaviour (yet) as CBPP3 (the third covered bond purchase programme) purchases are decreasing in any case for seasonal reasons amid shrinking primary market activity. However, it is ultimately only a matter of time until the ECB has no choice but to start official tapering on a broader front. Commerzbank expects the QE programme to be gradually reduced further from the beginning of 2018 and then finally cease at the end of 2018. Consequently, while up to now we have always regarded it as premature to speculate on the CBPP3 end game effects, it does make sense to start thinking now about the spread impact of the exit.

The decision by Moody’s to lower its sovereign rating on China was flagged-up in ECR’s crowd-sourcing survey more than a year ago, and it will mean higher funding costs in the offshore market.

Risk experts are still downgrading Azerbaijan in response to disappointing economic indicators, highlighting the effects of depressed oil prices and a lack of clarity from the government concerning its policymaking.

Euromoney’s country risk survey shows political risk rising in 64 countries this year. The march of populism is a key factor investors must consider before chasing tempting returns, but there are many others to guard against.

A stronger yen-won exchange rate underlines Japan’s perception of safety with Seoul now plunged into a crisis, awaiting elections and wary of tensions escalating on the Korean Peninsula.

Mexico is considered the most attractive emerging market (EM) by Bloomberg, but is not the safest according to Euromoney’s country risk metrics.

The borrower’s gradually improving risk profile could see it overtake Brazil and Turkey before too long.

Egypt’s fall from grace is one of the more noteworthy of recent years.

Euromoney’s survey experts continue to downgrade the borrower, disagreeing with the president’s claims there is no justification for it.

The OECD’s arguments in favour of a higher credit rating are endorsed by experts taking part in Euromoney’s country risk survey.

Geert Wilders’ Eurosceptic-populist Freedom Party might win the forthcoming parliamentary elections. Yet the prospect of him forming a government is low, preventing political risk from overshadowing economic and fiscal strengths.

Greece must find a way to secure more aid from its creditors, but is caught in the crossfire between the IMF defending its pleas for debt relief and European policymakers insisting on repayment. The outcome is likely to be messy given the preponderance of elections in Europe this year, and a sense of déjà vu by kicking the can further down the road.

The country has disappointed investors by revealing undisclosed liabilities, which is underlining how African borrowers must be treated with caution.

Since the global crisis, plenty has been written about banks paring back their lending activities and more stringent capital adequacy rules limiting funding opportunities, particularly for higher-risk borrowers such as smaller companies.

Leaping into tier three, the country is on course to regain the rating it lost four years ago.

The initial launch of the new regime for margin requirements for non-cleared derivatives passed on September 1. This first wave affected those firms with the largest presence in the market for both initial and variation margins under the new regulations.

The rating agencies still won’t budge as the two countries’ risk scores diverge.

ECR’s crowd-sourcing survey shows global risk rising in 2016, with leading economists and political experts revising their views on asset safety.

The borrower is on its knees, crippled by a huge debt burden and in need of an external lifeline. Only an IMF deal can improve its fortunes.

Euromoney Country Risk shows global risk rising, as leading economists and political experts revise their views on asset safety.

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.