Economy5 hours ago (Feb 15, 2021 11:35AM ET)
© Reuters. FILE PHOTO: The Fitch Ratings logo is seen at their offices at Canary Wharf financial district in London
LONDON (Reuters) – The cost of so-called ‘stranded assets’ as the world moves away from fossil fuels could cause substantial falls in exporters’ sovereign credit ratings in the coming decades, a new report from Fitch said on Monday.
The global push to limit climate change is expected to cut demand for coal, oil and gas, and the infrastructure required to get them out of the ground, turning them into ‘stranded assets’ that will never be fully utilised.
“A simulation on FitchRatings’ Sovereign Rating Model (SRM) suggests the fairly direct effects could lead to a fall in the SRM output by around one rating notch by 2040 and two to three notches by 2050 for a major oil exporter,” Fitch’s report said.
The 20 sovereigns with the highest ratio of net fossil fuel exports-to-GDP suffered a median net downgrade of 1.6 notches from 2015-2020. But two defaulted and a further three were downgraded by at least four notches, Fitch added.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.