My mission is to shed light on credit meaning in financial news. Credit is a mystery to many. It has been dwarfed by financial products with built-in winners and losers. Credit makes everyone a winner or everyone a loser, depending on motive and structure.
the interim government, led by Nobel laureate Muhammad Yunus , in Dhaka, Bangladesh , Thursday, Aug. 8, 2024. The Gen Z revolution in Bangladesh that began July 1 unfolded dramatically and routed Prime Minister Shaikh Hasina from office August 5. Its parallel drama is a credit story with two wildcard factors, one universal, one unique to Bangladesh .Credit distress and protesting youth go together, like love and marriage or death and taxes.
Compared to even to large corporations, sovereigns have built-in credit privileges and a long rope. For one thing, they don’t go out of business just because their rating is serially downgraded or they default on debt obligations. But their capacity to govern and operate can become severely constrained. Their reputations with private investors are damaged. They may lose their people’s mandate to govern.
Tunisia’s sovereign rating dipped below investment grade in 2013, to Ba2/BB. S&P immediately lowered it to B, then withdrew it. Moody’s dropped it eight notches, from Ba3 to currently Caa2—telegraphing Moody’s view that the default risk had at least doubled, from 33% to 65+%. Sovereign ratings of other countries followed similar trajectories: Egypt’s rating went from double-B to Caa1/B-.
From the orthodox sovereign credit perspective, Bangladesh faces two opposite scenarios. One is known: a return to the standard playbook of downward spiraling NIG sovereigns. The other is outside the standard playbook of sovereign credit rating assessment. In the short-run, neither is going to lift its sovereign credit rating.
Muhammad Yunus Microlending Microfinance Credit Gen Z Revolution Arab Spring Civil Unrest Sovereign Credit Rating Credit Crisis
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