Slovenia’s score tracking Cyprus downwards – Country Risk CEE Q1 results

By:
Jeremy Weltman
Published on:

Surprisingly, Slovenia registered a slightly higher score in Q1 2013, but beware: this was mostly due to quantitative survey factors.

In addition to experts’ factor scores, ECR aggregates the results with data on credit access, debt indicators and credit ratings to provide the overall risk score.

Slovenia might avoid the fate of Cyprus, but its risks have increased substantially in recent years, highlighting the early warning approach of the ECR quarterly score aggregation and leading Euromoney to raise the question: Could Slovenia be the next domino to fall triggering the Universe to implode (or just a bailout)?

The country’s mounting debt problems have been flagged by country experts over recent years, with its score falling by 16.6 points since 2010 in tandem with Cyprus – the Cypriot crisis has merely brought these solvency issues into focus.

Slovenia is considered somewhat less risky than Cyprus, overall, yet its bank stability has been downgraded further since December by 0.3 points to a new low of 4.7 out of 10.

Yet the gloom is not region-wide. All of CEE’s A-rated sovereigns residing in the second of ECR’s five-tiered groups have avoided score declines this quarter. The Czech Republic, Estonia, Slovakia and Poland might be vulnerable to the weakened export climate, but with more favourable fiscal dynamics and political environments, including stronger institutions and policymaking attributes, they are remarkably fine-tuned to withstand the worst of Europe’s debt crisis.

Indeed, with increased scores for the Czech Republic and Slovakia since December, there are now three countries in the region – Estonia is the other – with scores marginally exceeding 70 points out of 100. Forty or more points separate that triumvirate from high-risk, tier-five Montenegro and Bosnia-Herzegovina.



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