A clearer outlook on the United States' monetary policy cycle, economic policy adjustments and fewer energy price shocks make for more stable credit conditions for sovereigns across Europe, the Middle East and Africa, S&P Global said in a report.

Conditions are however stabilizing at lower levels, weighed down by the aftermath of the Covid pandemic and Russia's invasion of Ukraine as reflected in higher inflation, above-average debt burdens amid lower tax revenues, and weakened foreign exchange reserves.

"Fiscal space is in short supply, and the cost of new debt remains notably higher than it was two years ago, particularly for sovereigns with lower ratings," said credit analyst Frank Gill in S&P's midyear ratings trends report for the region, dated July 6.

The Nigerian and Turkish governments are adjusting their monetary policy settings in a way that S&P says could help them rebuild foreign-exchange reserves and stop the population from dollarizing their savings.

At the same time, the financial market view of where the Federal Reserve is heading with rates has converged with the Fed's own take over the past months, removing some of the uncertainty that creates market volatility - even if higher rates are in view.

Despite the "bright spots" S&P acknowledges, the outlook balance among the 55 countries in their EMEA universe remains the same as a year ago. There are seven countries with negative outlook and four with a positive one, from six and three respectively in June 2022.

All negative outlooks, Ethiopia, Kenya, Nigeria, Turkey, Uganda, and Ukraine are rated 'B' or below by S&P.

"The key factors in these outlooks reflect the legacy of the pandemic and the repercussions of the Russia-Ukraine war, namely, elevated inflation (except in Kenya); above-average debt burdens relative to tax collection (except in Turkey); and constrained coverage of external payments by net reserves, most notably for Egypt, Ethiopia, and Turkey," the report stated.

(Reporting by Rodrigo Campos; editing by David Evans)