Shadow Sovereign Ratings for Unrated Developing Countries

We predict sovereign ratings for developing countries that do not have risk ratings from agencies such as Fitch, Moody’s, and Standard and Poor’s. Ratings are important in determining the volume and cost of capital flows to developing countries through international bond, loan, and equity markets. S...

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Bibliographic Details
Published in:World development 2011-03, Vol.39 (3), p.295-307
Main Authors: Ratha, Dilip, De, Prabal K., Mohapatra, Sanket
Format: Article
Language:English
Subjects:
Bond market
Capital flow
Capital markets
Capital movement
country risk
Credit rating
Developing countries
developing countries sovereign rating country risk development finance
Development finance
Emerging markets
Equity
External debt
Financial risks
International loans
LDCs
Ratings & rankings
Risk assessment
sovereign rating
Studies
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Summary:We predict sovereign ratings for developing countries that do not have risk ratings from agencies such as Fitch, Moody’s, and Standard and Poor’s. Ratings are important in determining the volume and cost of capital flows to developing countries through international bond, loan, and equity markets. Sovereign rating also acts as a ceiling for the foreign currency rating of sub-sovereign borrowers and can be important for their access to international debt and equity capital. We generate shadow ratings for several developing countries that have never been rated and find that unrated countries are not always at the bottom of the rating spectrum. Several of them are projected to have a “B” or higher rating, in a similar range to that of the emerging market economies with capital market access.
ISSN:0305-750X
1873-5991
DOI:10.1016/j.worlddev.2010.08.006