Shadow Sovereign Ratings for Unrated Developing Countries

The authors attempt to 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 affect capital flows to developing countries through internatio...

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Main Authors:	Ratha, Dilip, De, Prabal, Mohapatra, Sanket
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ACTUAL DEBT BANK LENDING BENCHMARK BONDS BORROWING BORROWING COSTS BUDGET BALANCE CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS COMMERCIAL BANKS COUNTRY RISK COUNTRY RISK RATINGS CREDIT MARKET CREDITORS CREDITWORTHINESS CROSS-SECTION DATA CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT BURDEN DEBT BURDENS DEBT CRISIS DEBT DEFAULTS DEBT INTOLERANCE DEBT OBLIGATIONS DEBT RATIO DEBT RESTRUCTURING DEBT SERVICE DEFAULT DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES ECONOMETRIC MODEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC GROWTH PROSPECTS ECONOMIC OUTLOOK ECONOMIC STRUCTURE EMPIRICAL ANALYSIS EQUITY CAPITAL EQUITY MARKETS EXCHANGE RATES EXPLANATORY VARIABLE EXPLANATORY VARIABLES EXPORTS EXTERNAL DEBT EXTERNAL DEBT BURDEN EXTERNAL DEBT SERVICE EXTERNAL LIQUIDITY EXTERNAL OBLIGATIONS FINANCIAL CRISIS FINANCIAL STRUCTURES FORECASTS FOREIGN CURRENCY DEBT FOREIGN EXCHANGE GDP GDP PER CAPITA GOVERNMENT DEBT GROWTH RATE HIGH CORRELATION HIGHLY INDEBTED COUNTRY INCOME INDIVIDUAL COUNTRIES INFLATION INFLATION RATE INSURANCE INTEREST RATES INTERNATIONAL DEBT LINEAR REGRESSION LIQUIDITY LIQUIDITY CRISIS LOAN MARKETS LOCAL AUTHORITIES MACROECONOMIC VARIABLES NATIONAL INCOME NATURAL RESOURCES NEGATIVE RELATIONSHIP PER CAPITA INCOME POLICY RESEARCH POOR COUNTRIES POOR COUNTRY PRIVATE DEBT PRIVATE DEBT FLOWS PRIVATE SECTOR PROPERTY RIGHTS PUBLIC SECTOR REAL GDP REGRESSION ANALYSIS REGRESSION MODELS REGRESSION RESULTS REGRESSION SAMPLE RISK EVALUATION RISK PREMIUM SAVINGS SECURITIES SECURITIZATION SHORT TERM DEBT SHORT-TERM DEBT SOVEREIGN BOND SOVEREIGN BONDS SOVEREIGN BORROWERS SOVEREIGN DEFAULT
Online Access:	http://documents.worldbank.org/curated/en/2007/06/7746920/shadow-sovereign-ratings-unrated-developing-countries http://hdl.handle.net/10986/7448

id	okr-10986-7448
recordtype	oai_dc
spelling	okr-10986-74482021-04-23T14:02:33Z Shadow Sovereign Ratings for Unrated Developing Countries Ratha, Dilip De, Prabal Mohapatra, Sanket ACCOUNTING ACTUAL DEBT BANK LENDING BENCHMARK BONDS BORROWING BORROWING COSTS BUDGET BALANCE CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS COMMERCIAL BANKS COUNTRY RISK COUNTRY RISK RATINGS CREDIT MARKET CREDITORS CREDITWORTHINESS CROSS-SECTION DATA CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT BURDEN DEBT BURDENS DEBT CRISIS DEBT DEFAULTS DEBT INTOLERANCE DEBT OBLIGATIONS DEBT RATIO DEBT RESTRUCTURING DEBT SERVICE DEFAULT DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES ECONOMETRIC MODEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC GROWTH PROSPECTS ECONOMIC OUTLOOK ECONOMIC STRUCTURE EMPIRICAL ANALYSIS EQUITY CAPITAL EQUITY MARKETS EXCHANGE RATES EXPLANATORY VARIABLE EXPLANATORY VARIABLES EXPORTS EXTERNAL DEBT EXTERNAL DEBT BURDEN EXTERNAL DEBT SERVICE EXTERNAL LIQUIDITY EXTERNAL OBLIGATIONS FINANCIAL CRISIS FINANCIAL STRUCTURES FORECASTS FOREIGN CURRENCY DEBT FOREIGN EXCHANGE GDP GDP PER CAPITA GOVERNMENT DEBT GROWTH RATE HIGH CORRELATION HIGHLY INDEBTED COUNTRY INCOME INDIVIDUAL COUNTRIES INFLATION INFLATION RATE INSURANCE INTEREST RATES INTERNATIONAL DEBT LINEAR REGRESSION LIQUIDITY LIQUIDITY CRISIS LOAN MARKETS LOCAL AUTHORITIES MACROECONOMIC VARIABLES NATIONAL INCOME NATURAL RESOURCES NEGATIVE RELATIONSHIP PER CAPITA INCOME POLICY RESEARCH POOR COUNTRIES POOR COUNTRY PRIVATE DEBT PRIVATE DEBT FLOWS PRIVATE SECTOR PROPERTY RIGHTS PUBLIC SECTOR REAL GDP REGRESSION ANALYSIS REGRESSION MODELS REGRESSION RESULTS REGRESSION SAMPLE RISK EVALUATION RISK PREMIUM SAVINGS SECURITIES SECURITIZATION SHORT TERM DEBT SHORT-TERM DEBT SOVEREIGN BOND SOVEREIGN BONDS SOVEREIGN BORROWERS SOVEREIGN DEFAULT The authors attempt to 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 affect 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. As of the end of 2006, however, only 86 developing countries have been rated by the rating agencies. Of these, 15 countries have not been rated since 2004. Nearly 70 developing countries have never been rated. The results indicate that the unrated countries are not always at the bottom of the rating spectrum. Several unrated poor countries appear to have a "B" or higher rating, in a similar range as the emerging market economies with capital market access. Drawing on the literature, the analysis presents a stylized relationship between borrowing costs and the credit rating of sovereign bonds. The launch spread rises as the credit rating deteriorates, registering a sharp rise at the investment grade threshold. Based on these findings, a case can be made in favor of helping poor countries obtain credit ratings not only for sovereign borrowing, but for sub-sovereign entities' access to international debt and equity capital. The rating model, along with the stylized relationship between spreads and ratings can be useful for securitization and other financial structures, and for leveraging official aid for improving borrowing terms in poor countries. 2012-06-07T19:43:18Z 2012-06-07T19:43:18Z 2007-06 http://documents.worldbank.org/curated/en/2007/06/7746920/shadow-sovereign-ratings-unrated-developing-countries http://hdl.handle.net/10986/7448 English Policy Research Working Paper; No. 4269 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ACTUAL DEBT BANK LENDING BENCHMARK BONDS BORROWING BORROWING COSTS BUDGET BALANCE CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS COMMERCIAL BANKS COUNTRY RISK COUNTRY RISK RATINGS CREDIT MARKET CREDITORS CREDITWORTHINESS CROSS-SECTION DATA CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT BURDEN DEBT BURDENS DEBT CRISIS DEBT DEFAULTS DEBT INTOLERANCE DEBT OBLIGATIONS DEBT RATIO DEBT RESTRUCTURING DEBT SERVICE DEFAULT DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES ECONOMETRIC MODEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC GROWTH PROSPECTS ECONOMIC OUTLOOK ECONOMIC STRUCTURE EMPIRICAL ANALYSIS EQUITY CAPITAL EQUITY MARKETS EXCHANGE RATES EXPLANATORY VARIABLE EXPLANATORY VARIABLES EXPORTS EXTERNAL DEBT EXTERNAL DEBT BURDEN EXTERNAL DEBT SERVICE EXTERNAL LIQUIDITY EXTERNAL OBLIGATIONS FINANCIAL CRISIS FINANCIAL STRUCTURES FORECASTS FOREIGN CURRENCY DEBT FOREIGN EXCHANGE GDP GDP PER CAPITA GOVERNMENT DEBT GROWTH RATE HIGH CORRELATION HIGHLY INDEBTED COUNTRY INCOME INDIVIDUAL COUNTRIES INFLATION INFLATION RATE INSURANCE INTEREST RATES INTERNATIONAL DEBT LINEAR REGRESSION LIQUIDITY LIQUIDITY CRISIS LOAN MARKETS LOCAL AUTHORITIES MACROECONOMIC VARIABLES NATIONAL INCOME NATURAL RESOURCES NEGATIVE RELATIONSHIP PER CAPITA INCOME POLICY RESEARCH POOR COUNTRIES POOR COUNTRY PRIVATE DEBT PRIVATE DEBT FLOWS PRIVATE SECTOR PROPERTY RIGHTS PUBLIC SECTOR REAL GDP REGRESSION ANALYSIS REGRESSION MODELS REGRESSION RESULTS REGRESSION SAMPLE RISK EVALUATION RISK PREMIUM SAVINGS SECURITIES SECURITIZATION SHORT TERM DEBT SHORT-TERM DEBT SOVEREIGN BOND SOVEREIGN BONDS SOVEREIGN BORROWERS SOVEREIGN DEFAULT
spellingShingle	ACCOUNTING ACTUAL DEBT BANK LENDING BENCHMARK BONDS BORROWING BORROWING COSTS BUDGET BALANCE CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS COMMERCIAL BANKS COUNTRY RISK COUNTRY RISK RATINGS CREDIT MARKET CREDITORS CREDITWORTHINESS CROSS-SECTION DATA CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT BURDEN DEBT BURDENS DEBT CRISIS DEBT DEFAULTS DEBT INTOLERANCE DEBT OBLIGATIONS DEBT RATIO DEBT RESTRUCTURING DEBT SERVICE DEFAULT DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES ECONOMETRIC MODEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC GROWTH PROSPECTS ECONOMIC OUTLOOK ECONOMIC STRUCTURE EMPIRICAL ANALYSIS EQUITY CAPITAL EQUITY MARKETS EXCHANGE RATES EXPLANATORY VARIABLE EXPLANATORY VARIABLES EXPORTS EXTERNAL DEBT EXTERNAL DEBT BURDEN EXTERNAL DEBT SERVICE EXTERNAL LIQUIDITY EXTERNAL OBLIGATIONS FINANCIAL CRISIS FINANCIAL STRUCTURES FORECASTS FOREIGN CURRENCY DEBT FOREIGN EXCHANGE GDP GDP PER CAPITA GOVERNMENT DEBT GROWTH RATE HIGH CORRELATION HIGHLY INDEBTED COUNTRY INCOME INDIVIDUAL COUNTRIES INFLATION INFLATION RATE INSURANCE INTEREST RATES INTERNATIONAL DEBT LINEAR REGRESSION LIQUIDITY LIQUIDITY CRISIS LOAN MARKETS LOCAL AUTHORITIES MACROECONOMIC VARIABLES NATIONAL INCOME NATURAL RESOURCES NEGATIVE RELATIONSHIP PER CAPITA INCOME POLICY RESEARCH POOR COUNTRIES POOR COUNTRY PRIVATE DEBT PRIVATE DEBT FLOWS PRIVATE SECTOR PROPERTY RIGHTS PUBLIC SECTOR REAL GDP REGRESSION ANALYSIS REGRESSION MODELS REGRESSION RESULTS REGRESSION SAMPLE RISK EVALUATION RISK PREMIUM SAVINGS SECURITIES SECURITIZATION SHORT TERM DEBT SHORT-TERM DEBT SOVEREIGN BOND SOVEREIGN BONDS SOVEREIGN BORROWERS SOVEREIGN DEFAULT Ratha, Dilip De, Prabal Mohapatra, Sanket Shadow Sovereign Ratings for Unrated Developing Countries
relation	Policy Research Working Paper; No. 4269
description	The authors attempt to 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 affect 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. As of the end of 2006, however, only 86 developing countries have been rated by the rating agencies. Of these, 15 countries have not been rated since 2004. Nearly 70 developing countries have never been rated. The results indicate that the unrated countries are not always at the bottom of the rating spectrum. Several unrated poor countries appear to have a "B" or higher rating, in a similar range as the emerging market economies with capital market access. Drawing on the literature, the analysis presents a stylized relationship between borrowing costs and the credit rating of sovereign bonds. The launch spread rises as the credit rating deteriorates, registering a sharp rise at the investment grade threshold. Based on these findings, a case can be made in favor of helping poor countries obtain credit ratings not only for sovereign borrowing, but for sub-sovereign entities' access to international debt and equity capital. The rating model, along with the stylized relationship between spreads and ratings can be useful for securitization and other financial structures, and for leveraging official aid for improving borrowing terms in poor countries.
format	Publications & Research :: Policy Research Working Paper
author	Ratha, Dilip De, Prabal Mohapatra, Sanket
author_facet	Ratha, Dilip De, Prabal Mohapatra, Sanket
author_sort	Ratha, Dilip
title	Shadow Sovereign Ratings for Unrated Developing Countries
title_short	Shadow Sovereign Ratings for Unrated Developing Countries
title_full	Shadow Sovereign Ratings for Unrated Developing Countries
title_fullStr	Shadow Sovereign Ratings for Unrated Developing Countries
title_full_unstemmed	Shadow Sovereign Ratings for Unrated Developing Countries
title_sort	shadow sovereign ratings for unrated developing countries
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2007/06/7746920/shadow-sovereign-ratings-unrated-developing-countries http://hdl.handle.net/10986/7448
_version_	1764402059389435904

Shadow Sovereign Ratings for Unrated Developing Countries

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