Emerging Markets
Emerging markets encompass regions with significantly diverging fundamentals and a broad range of credit challenges—from persistent inflation and tightening financing conditions to sluggish domestic demand and geopolitical tensions.
How We Rate Emerging and Frontier Markets
Emerging and frontier markets are strategically positioned to drive global economic growth through the expansion of their domestic markets.
Emerging and frontier markets will play a crucial role in shaping the global economy and driving growth, contributing approximately 65% of global economic growth by 2035. Frontier markets will play a prominent role in this growth due to their favorable demographics—but face significant challenges from persistently high inflation and political uncertainty.
Monthly Highlights
High Energy Costs And Tighter Policy Pose Risks
Expectations of the Fed's further tightening have tested the resilience of capital flows to emerging markets (EMs) in the past month. Flows into EM debt turned negative in September for the first time since March, when the outbreak of the Iran war triggered capital outflows. If the recent strengthening of the U.S. dollar persists, it could continue to weigh on EM capital flows in the coming months.
Higher energy prices, especially for refined products, will keep inflation elevated. Transport fuel costs have risen most in Türkiye, the Philippines, and Peru. Fuel subsidies will strain EM fiscal balances, while second-round inflation effects may emerge soon.
Domestic demand in EM Asia has remained broadly resilient. However, higher food prices linked to El Niño, rising energy costs, and tighter monetary policy are likely to weigh on household spending. As a result, we expect demand growth to moderate in the coming months.
The policy-rate differential between Mexico and the U.S. has narrowed to a record low, intensifying depreciation pressure on the Mexican peso. We therefore anticipate Mexico's central bank to tighten monetary policy in the coming months if further exchange rate depreciation increases inflation expectations.
Fiscal pressures are rising across several developed markets, while debt levels remain more contained in some EMs despite their generally higher interest burdens. Narrowing fiscal differentials and higher EM yields continue to support demand for EM debt.
Latin America
October 05, 2026
Brazil Gaming Brief: Online Gambling Ban Could Curb Operators’ Growth
A provisional measure in Brazil to ban online gaming and sports betting activities, ahead of the presidential election, could weaken the growth trajectory of rated international gaming operators. S&P Global Ratings believes the credit impact will depend on individual operators’ exposure to Brazil, existing leverage, and rating headroom. While the suspension alone is unlikely to trigger immediate rating actions, it could reduce rating headroom for issuers already facing operating or regulatory pressures.
EM EMEA
October 05, 2026
The Islamic Finance Industry Outlook: 2027 Edition
The Middle East war has significantly affected the economic growth outlook in some core Islamic finance countries, reducing sukuk issuance and growth opportunities for the banking systems of these countries.
We expect global Islamic finance industry growth to slow in 2026 before recovering in 2027, assuming a resolution of the Middle East war and the gradual normalization of oil and gas supply, trade, and transportation.
Our base case assumes the U.S. and Iran will reach an agreement that eases the effective blockage of the Strait of Hormuz, allowing meaningful oil and product flows to resume by the end of May, but that intermittent disruptions could persist.
EM Asia-Pacific
Credit Conditions
September 24, 2026
Credit Conditions & Outlook Asia-Pacific Q4 2026: Compounding Risks, Amplified Effects
Asia-Pacific's credit conditions remain supportive on resilient growth, functioning financing channels, and AI-linked export demand that is fueling tech-oriented economies.
But credit cushions are thinning on energy disruption, weaker currencies, potentially higher funding costs, and fiscal strains. • Rising government bond yields, elevated leverage, and competing sovereign and AIrelated funding needs could squeeze weaker borrowers into 2027.
AI concentration risk, China's domestic slowdown, climate shocks, cyber costs, and policy/geopolitical shifts point to wider credit dispersion.
Frontier Markets
Emerging Markets
July 29, 2026
African Markets Quarterly Highlights: Resilient Ratings, Rising Risks
Triple threat to Africa (inflation, growth, and financing) remains in place: Rising diesel, gasoline, and shipping fuel costs are weakening fuel demand across most markets, while inflation in countries such as Ghana and Mozambique is approaching growth-sensitive levels. A strong El Niño climate pattern could further amplify food-price pressures.
The energy price shock is widening policy and credit divergence across Africa. Southern Africa has absorbed some of the region's largest fuel-price increases, while subsidy regimes in the Economic and Monetary Community of Central Africa (CEMAC) and Angola have limited the household impact at the expense of higher fiscal burdens.
External liquidity risks vary widely across Africa, reflecting differences in both financing needs and reserve buffers. While reserve pooling supports resilience in WAEMU and CEMAC, CEMAC remains more exposed to external shocks due to its heavier reliance on hydrocarbon exports.
External financing conditions have stayed mostly supportive. African sovereign U.S. dollar yields edged up only modestly to around 8.0% from mid-June lows despite broader inflation pressures. Yet growing divergence in localcurrency yields, led by Egypt (+258 basis points [bps]), Nigeria (+190 bps), and Ghana (+93 bps), points to increasingly differentiated domestic funding conditions.
Sovereign ratings remain resilient, with African reforms and steady financing conditions sustaining positive momentum despite the Middle East war, illustrated by our recent upgrade of Nigeria to ‘B’ on the back of its improving macroeconomic profile.