Moody's Investors Service says in a newly published report that Vietnam (Ba3 negative), the Bahamas (Baa3 stable), Egypt (B2 stable), Suriname (B2 stable) and other small island sovereigns are among the most exposed to a global rise in sea levels according to a range of studies.

Climate science shows that sea levels will most likely continue to rise for decades. Although this will happen gradually, higher sea levels contribute to increasingly frequent and severe natural disasters such as storm surges, floods or cyclones.

Moody's explains that the sovereign credit implications of sea level rise and the related natural disasters are wide-ranging. The economic and social repercussions of lost income, damage to assets, a loss of life, health issues and forced migration from the sudden events related to sea level rise are immediate. The main credit channels for sovereigns are through their economic and fiscal strength.

Vulnerability to extreme events related to sea level rise can also undermine investment and heighten susceptibility to event risk, by hindering the ability of governments to borrow to rebuild, increasing financial risks, raising external pressures, and/or amplifying political risk as populations come under stress and institutional capacities are tested.

The extent of risk will be determined by the pace of increase in the frequency and severity of natural disasters related to sea level rise, which is currently highly uncertain, and by the effectiveness of adaptation measures, so far largely untested.