Sovereign Ratings

Paper Summary:

The writer of the well-researched paper examines the history of sovereign ratings which have been around since approximately 1979. This paper details the importance of sovereign ratings, which basically assess the financial worth of an individual country. This paper analyzes the methods in which countries are rated, which include calculating the financial history, current assets and liabilities of a particular country. Sovereign ratings are significant when calculating whether or not a particular country can repay its debt, or whether the country in question will choose to default on its debt, to the lending country. This paper delves into the relevance of these ratings, when dealing with international trade and currency. This paper explores the various risks involved in lending money to sovereign nations. This paper examines the methodologies that are generally used by rating agencies, such as Standard and Poor's and Moody's. The writer discusses the various shortcomings that are associated with sovereign ratings, while discussing why certain countries, such as Korea and Malaysia do not have good ratings. This paper also supplies two tables relevant to this particular topic, including a sovereign credit rating, listed by country.

Table of Contents:
Literature Review
Introduction
History of Sovereign Ratings
Methodologies Used by Rating Agencies
Shortcomings
Conclusion
Works Cited

From the Paper:

"While sovereign ratings are seen to be very important, more recent history is still suggestive of the fact that lending to sovereigns remains very risky. A survey taken by Standard & Poor's that dealt with 72 governments and looked at the debt based on outstanding foreign and domestic currency indicated that 30 of these had defaulted at least one time on either foreign or domestic currency debt since 1970. None of these sovereigns had any type of sovereign rating by a rating agency that was recognized internationally before they defaulted but nine of them have been rated subsequently by Standard & Poor's and Moody's. The frequency of default for many of these countries has been relatively high and this has been something that has caused a lot of stress and concerns for individuals in those sovereign countries that are simply trying to conduct good business today without being held back by the past."

More papers on Sovereign Ratings:

• Essay # 40527 : "Sovereign Sector investment"
• Research Paper # 99102 : "Foreign Direct Investment"
• Comparison Essay # 16489 : "Hobbes and American Politics"

APA Citation:

MLA Citation: