Euromoney Country Risk Survey Results Q1 2014

Country Risk: Euromoney’s Country Risk Survey Q1 2014 Results: Ukraine & CEE update Eurozone staging a comeback Many of the debt-distressed eurozone sovereigns, meanwhile, have a long uphill climb to regain the levels of safety prevailing before the global credit crunch in 2007/08. Nevertheless, apart from the anxieties circling over the Baltic states – and Finland, too, which is still in a slump and vulnerable because of its trade links with Russia – only Cyprus among the euro participants saw its country-risk score continue to fall in Q1. Scores for Ireland, Italy, Portugal and Spain remarkably staged a comeback in Q1, reflecting in part the brightening economic outlook, with GDP growth returning – or on the brink of returning – brightening the outlook for countries mired in recession for years. A gradually improving political picture is also factored in. In Italy, for example, where despite the inherent difficulties involved, new prime minister Matteo Renzi is bent on reform to enact constitutional change to strengthen the electoral system and clear up the country’s fiscal mess. Ireland’s exit from its troika bailout in December without ongoing programme support and a repeat act for Portugal this summer is bolstering their appeal, amid rising investor faith in structural reform programmes delivering more sustainable borrowing profiles for many eurozone participants. However, although Greece has returned to the bond markets for the first time in more than four years, its risk-score remains very low, anchoring the bankrupt sovereign to the lowest of ECR’s categories containing the world’s highest-risk sovereigns. An enormous debt burden – peaking at 177% of GDP this year, according to the European Commission – a tricky political climate and the longer-term tail-risk of a Grexit are still hanging over Athens. Over the worst: eurozone risks diminishing (risk scores out of 100) Source: Euromoney Country Risk 64 62 60 58 56 54 52 50 48 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 5 Ireland Spain Italy Portugal View Print Exit

Euromoney Country Risk Survey Results Q1 2014 | Page 5