How do the Results Given by International Rating Agencies Penalize Spain? Criteria to Analyse the Country Risk and to Determine the Risk Premium

• Published in: Estudios de economía aplicada 2014-09, Vol.32 (3), p.1161-1188
• Main Authors: FRUET-CARDOZO, J VICENTE, CAÑAS-MADUEÑO, JUAN ANTONIO, MILLÁN DE LA LASTRA, JOSÉ RAMÓN
• Format: Article
• Language: English
• Subjects: Agencias internacionales de calificación; and Liquidity Indicators; Análisis de país; Bond issues; Bond ratings; Country Analysis; Country Risk; de solvencia y de liquidez; Economic; económicos; España; Global Risk Index; Indicador global del riesgo; International finance; International Rating Agencies; país; Politic; Prima de riesgo; Ratios políticos; Riesgo; Risk Premium; Risk premiums; Solvency; Sovereign debt; Spain
• ISSN: 1133-3197; 1697-5731; 1697-5731

Within the last few years, the main international rating agencies have become even more prominent. They are men¬tioned in different circumstances. Some people think these agencies are managed by international speculators; others consider that their work is too technical and impartial, and others believe they should be replaced by exclusively European rating agencies. As seen, there are several opinions, but the fact is that financial analysts’ recommendations and investors’ decisions, concerning a real, financial economy, are based on the rating given to sovereign debts and companies quoted in international financial markets. This article uses a methodology concentrating the different criteria used by two of the main international rating agencies: Standard and Poor's and Moody's. Spain is the country analyzed and this is done from four points of view: political, economical, solvency, and liquidity. The data compared ranges from December 2001 to December 2012. The results show an evident and general deterioration.