January 21, 2009

Paris, January 20, 2009 -- During its 13th Country Risk Conference, held on January 19, 2009, Coface announced the downgrades of 22 country ratings. For the first time, two of the biggest emerging countries, China and Russia, were negative watch-listed simultaneously.

Additionally, Coface forecasted that the current credit crisis will end as 2009 comes to a close. For Coface a credit crisis is a significant worsening in the payment behavior of companies. Coface has recorded four global credit crises since 1973. The fifth crisis began in January 2008.

On a worldwide level, the growth differential anticipated from 2007 to 2009 is now 3.1 GDP points. During the previous credit crisis between 2000 and 2001, the rate was only 2.5 points. This slackening of growth explains the 50% rise in the Coface payment default index between 2007 and 2008. Coface forecasts that the credit crisis will only end when the year 2009 comes to a close. A credit crisis similar to those of the 1980s and 1990s Given the new global growth forecast of 0.9% for 2009, the credit crisis that started at the beginning of 2008 resembles those of the early 1980s and 1990s. The slowdown in growth from 2007 to 2009 should be 3.1 points - just as from 1979 to 1982, and from 1989 to 1991. However, it is below that of the first oil shock. The crisis took on a new dimension in the fourth quarter, when businesses in countries that had managed to hold out so far (such as Germany) were affected. For the year 2008, Coface registered an increase of 47% in its payment default index, with an acceleration during the fourth quarter. Since its January 2008 start in the United States, the crisis then spread to the other so-called "bubble" countries (the United Kingdom, Spain, Ireland, etc.). Now, no area appears to be spared. The industrialized countries close to the epicentre of the crisis have been affected, followed by the countries with no speculative bubbles but sustaining flat growth (Italy, France, Germany, Japan, etc.), along with the fragile emerging countries (South Africa, Vietnam, etc.) China and Russia: Vulnerable companies undergoing a slowdown All industrialized country ratings were downgraded in 2008, and now Coface has placed the BRIC countries of Russia and China under negative watch. Coface forecasts 7% growth for China in 2009. The Coface survey on Chinese company payment behavior, conducted for the last 6 years, highlights the effects of excessive competition on the private sector's contracting profit margins. In this context, the slowdown in growth will result in an increase of payment defaults on the part of Chinese companies. China's A3 rating has been placed on negative watch. Hong Kong and Taiwan have been downgraded to A2. For Russia, Coface forecasts growth of 2.5% in 2009. Coface business-to-business payment experience in Russia deteriorated in 2008, mainly due to persistent deficiencies in corporate governance. These problems have already been taken into account in Russia's B rating. The country is now severely affected by the crisis (drop in credit, fall in oil prices). The foreign debt of Russian companies has risen 140% since 2005, which should generate further payment default. For this reason, Russia's rating has been placed on negative watch.

Ratings Changes
Country	Former classification	Changes
Industrialized countries
Germany	A1	Negative watch A1
Belgium	A1	Negative watch A1
Australia	A1	Downgrade A2
New Zealand	A1	Downgrade A2
Spain	A2	Negative watch A2
Greece	A2	Negative watch A2
Asia
Singapore	A1	Negative watch A1
Taiwan	A1	Downgrade A2
Hong Kong	A1	Downgrade A2
China	A3	Negative watch A3
Pakistan	C	Negative watch C
Emerging Europe and CIS
Slovenia	A1	Negative watch A1
Poland	A3	Positive watch withdrawal A3
Hungary	A3	Negative watch A3
Croatia	A4	Negative watch A4
Russia	B	Negative watch B
Ukraine	C	Negative watch C
Albania	D	Positive watch withdrawal D
Latin America
Chile	A2	Negative watch A2
Mexico	A3	Downgrade A4
Ecuador	C	Negative watch C
Middle East
UAE	A2	Negative watch A2