The Country Credit Survey September

The stock market is not the real economy. That mantra seems to have been taken to heart by many of those involved in evaluating credit risk around the world.

A sharp drop in Chinese equities in the past two months has triggered a bout of global financial volatility, pushing stocks into correction territory in most major markets and arousing concern about the health of the worldwide economy. Yet global creditworthiness remains remarkably steady, according to the latest Institutional Investor Country Credit survey. The average rating on the 179 countries in the survey is unchanged from six months ago, at 44.1 on a scale of zero to 100. Ratings of the major industrialized countries show little movement, even in the euro zone. There are numerous declines among countries in Latin America, Africa, the Middle East and Eastern Europe, but these are largely offset by increases in a number of Asian ratings.

Such zigs and zags are typical in the semiannual survey. What’s unusual this time is the diminutive scale of the movements. Most of the ups and downs are no more than a point or two, more like a technical correction than a change of heart. The only significant exception, not surprisingly, is Greece, which went to the brink of default in its standoff against its euro zone partners in June and July. The country’s rating falls another 10.5 points; Greece now ranks 145th in the survey, sandwiched between Myanmar and Togo.

“People are taking a wait-and-see attitude,” says Fabian Briegel, an economist at Rabobank in the Netherlands. Creditworthiness is treading water because the good news is never quite good enough, while the bad news is never quite disastrous.