Japan has bounced back to 33rd place on the latest quarterly BlackRock Sovereign Risk Index (BSRI) update, on the back of the new government’s "clear mandate and appetite for change", whereas France has slipped two notches to 29th place, according to Blackrock.
The reason for the jump has been attributed to Japan’s "willingness to pay score", triggered by the election of Prime Minister Abe Shinzo with a clear mandate to rev up the economy through quantitative easing and inflation targeting.
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Japan’s Fiscal Space score edged down as net debt rose to 138% of GDP, from 135%. On the plus side, the country’s projected budget deficit decreased to (a still high) 8.9%, from 9.4%.
The increase of France’s external debt burden, including quasi-external debt or euro-denominated debt, resulted in it slipping to 29th place on the BSRI. France extended its maturity profile slightly, but made less headway than other countries, which caused France’s relative external debt profile to worsen, according to BSRI. France’s deteriorating financial health was alos apparent on the BSRI.
Belgium and Austria also moved down in the rankings by two spots each, primarily because of increases in their (quasi)-external debt burdens. All eurozone countries tracked by the BSRI have negative scores in this area – except Germany.
Indonesia sank three spots to 36th place – its lowest ranking since the BSRI was started in 2011. "Heady credit growth" pushed up its loans-to-deposit ratio to 98.1% of GDP, from 92.2%, according to BSRI, and Indonesia’s projected current account deficit increased to 1.95% of GDP, from 1.61%.
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By GlobalDataDenmark rose two spots to 11th place due to improved external finance and banking sector scores – the first was driven by a big improvement in Denmark’s term structure as bonds maturing in less than two years dropped by about half to less than 5% of GDP. The country’s financial sector health also improved, due to a decrease in private sector credit as a percentage of GDP.
