S&P: Five countries most vulnerable

Standard & Poor's said in a report that Latvia, Iceland, Bulgaria, Turkey and Romania are the sovereigns of a 15 country sample in Europe, the Middle East and Africa (EMEA) that are most at risk of negative repercussions if the current tighter liquidity conditions were to expand and intensify.

The agency said that this is the result of the Liquidity Vulnerability Index it developed to assess sovereigns' resilience to adverse market conditions.

At the other end of the spectrum, Russia, Egypt, Ukraine and the Czech Republic should, in principle, have least to fear from the changing mood in the capital markets, S&P said.

Lithuania, Lebanon, Slovakia, Poland, Hungary and South Africa are in an intermediate position, the report added.

"We have not, to date, changed any ratings or outlooks due to the tighter financial conditions," said S&P credit analyst Moritz Kraemer.

"Over the past 24 months, however, we have lowered ratings or outlooks for a number of sovereigns in the sample with deteriorating credit fundamentals."

These negative ratings and outlook actions are concentrated in those sovereigns that, according to the Liquidity Vulnerability Index, are most exposed to changes in investor risk appetite, the agency said.

On the other hand, the relatively sheltered group experienced positive rating actions during the maturing credit cycle, S&P added.

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