Credit insurer warns of U.S., Baltic negatives.

Trade credit insurer Coface S.A. said it placed the United States and two Baltic states on its negative watch list, citing troubling economic and stock market developments.

At the same time, Paris-based Coface downgraded Thailand and Iran, two countries where weakening economic conditions have coupled with political uncertainty.

The United States, with an A1 country risk rating from Coface, is seeing "decreased dynamism" and stock-market tensions, said Coface in a statement. The credit insurer is also concerned that a problematic residential real estate market could affect household consumption, and vulnerable companies could be hurt by more difficult access to credit. Risk levels in the automobile, mass retail, pharmaceutical and construction sectors are high, Coface said.

Credit risk levels in Central and Eastern Europe remain high, following an earlier downgrade of Hungary's country risk rating [from A2 to A3], the company said. Latvia [rated A3] and Estonia [rated A2], which both made the negative watch list, are "showing clear signs of overheating, which is linked to a major rise in credit," Coface said.

Latvia's gross domestic product rose 12% last year, and Estonia's rose 11.4%. Economic imbalances leave both countries vulnerable to a currency crisis and/or a marked slowdown in economic activity, the insurer said.

Companies in both countries are also showing high levels of foreign currency debt, according to Coface.

The insurer said it hasn't changed its views on neighboring Lithuania, which it says "seems to be better equipped than its neighbors to withstand a mood of mistrust, which could spread across the whole of the Baltic states."

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