Professional Documents
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RiskRating
RiskRating
MH BOUCHET/CERAM-Global Finance
BERI (Business Environment Risk Index) Dun and Bradstreet, Moody s, S & P, Fitch Institutional Investor Frost & Sullivan Euromoney Fraser Instiotute Credit Risk International (Paris) International Country Risk Guide (NY/London) Coface & Ducroire Heritage Foundation Transparency International DBRS: http://cache.dbrs.com/pdf/20752303634573.pdf?transactionID=421961
MH BOUCHET/CERAM-Global Finance
Transforming a number of observations (Delphi method, surveys) or quantitative indicators into one number. The various indicators can be weighted regarding their impact on creditworthiness and risk. End-product: one single grade to assess past and current country risk situation with possible crosscountry comparisons across time
MH BOUCHET/CERAM-Global Finance
Simple cross-country comparison comparison across time shrinks a large number of variables into one single grade Reliable for smooth risk evolution
Shortcomings/Cons reductionist oversimplistic risk of self-fulfilling prophecy little predictive value weighted average tends to bury salient trends Gives market consensus
often made of herd instinct
MH BOUCHET/CERAM-Global Finance
(C.
Rating agencies are to be independent third parties that are consulted in the course of a market transaction. The goal is to overcome asymmetric information between both market sides by using standardized quality assessement methods. Criticisms: * Power without accountability * Conformity bias * Sociocultural bias * Punishment of disobedient firms/countries that do not request a rating * Procyclical bias, hence followjng the majority opinion of market participants without any early warning signals nor predictability track record
MH BOUCHET/CERAM-Global Finance
agency which rated the Republic of Korea at the high investment grade rating of AA- (in the case of Fitch IBCA and S&Ps) or A1 (in the case of Moodys) before the crisis, and which now rates Korea at a speculative grade B-, was clearly either wrong initially or subsequently. Clients are entitled to expect us to perform better in the future! Fitch IBCA January 13, 1998
When
MH BOUCHET/CERAM-Global Finance
South Korea wa s rated as Italy and Sweden as late as October of 1997! But abrupt downgrading to junk bond status during the crisis There were no early warnings about Korea from us or, to the best of our knowledge, from other market participants and our customers should expect a better job from us FICHT IBCA January 14, 1998
MH BOUCHET/CERAM-Global Finance
Standard & Poor' s June 1996 June 1997 BBB BBB AAAAA+ A+ BB BB+ A A
MH BOUCHET/CERAM-Global Finance
1997 30 51
1998 42 54
1999 44 49
2000 29 65
2006 37 57
2007 38 60
28 45
55
33 45
57
35 49
55
56 91
53
46 98
78
46 107
80
46 85
78
49 81
Malaysia
Indonesia
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
Political Risk
Acceptable Zone
High
Financial Risk
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
risk analysis cannot & should not be boiled down to bond rating!
Risk
might stem from a wide range of strategies, including FDI, exporting and importing, lending, portfolio investment, consultancy contracts.
MH BOUCHET/CERAM-Global Finance
Swiss-based private source for risk rating on over 130 countries created in the late 1960s, the oldest risk assessment service. Delphi Method with a panel of 105 international experts rating 15 criteria for current and medium-term business horizon
3 components of country risk: business climate, political stability, currency and repayment risk. FORELEND reports (Forecast of Country Risk for International Lenders)
MH BOUCHET/CERAM-Global Finance
BERI S.A.
Economic,
financial, monetary, operating and political conditions are integral components of the 0 (worst case) to 100 (best case) system for assessing countries. Two risk indexes three times a year: ORI Operations Risk Index and PRI Political Risk Index.
Output:
Remittance and repatriation Factor: the R Factor, with forecasts for +1 year and +5 years.
MH BOUCHET/CERAM-Global Finance
BERI S.A.
Worst country ratings Venezuela Pakistan Colombia Indonesia Ecuador Nigeria Ivory Coast North Korea
MH BOUCHET/CERAM-Global Finance
Euromoney
Semi-annual country risk scoring of 185 countries, both OECD and EMCs
Rating Methodology:
Panel of 32 leading economists in international financial institutions evaluing country performance in the financial markets (market access, spreads, selldown, terms and maturity) Scoring between 100 (excellent) and 0 (considerable risk) + Panel of political analysts to measure short-term risk of destabilization
MH BOUCHET/CERAM-Global Finance
Euromoney
Euromoney establishes an overall score for countries using nine weighted categories which are calculated as follows: the highest score in each category receives the full mark for the weighting; the lowest receives 0. In between, figures are calculated according to the formula: final score = (weighting / (maximum score-minimum score)*(maximum score-minimum score). The ranking shows the final scores after weighting.
Categories = Economic performance (25% weighting), Political Risk (25%), Debt indicators (10%), Debt in default or rescheduled (10%), Credit ratings (10%), Access to bank finance (5%), Access to short-term finance (5%), Access to capital markets (5%) and Discount on forfaiting (5%).
MH BOUCHET/CERAM-Global Finance
Rating: EUROMONEY
Growth performance: 25% (GDP projections) Political risk: 25% External debt indicators: 10% (debt/GDP et debt/X) External payment default and rescheduling: 10% Credit rating Moody s or S&P: 10% Short-term credit market access: 5% Commercial bank MT credit: 5% Capital markets access: 5% Spread over US Treasury bills: 5%
MH BOUCHET/CERAM-Global Finance
42= Poland 44= Chile 50= Mexico 54= China 62= Tunisia 65= Morocco 69= Egypt 79= Algeria 184= North Korea
MH BOUCHET/CERAM-Global Finance
End-2001 14= Singapore 28= Tawan 30= HongKong 40= Chile 39= Hungary 40= Brunei 42= Poland 45= China 56= Malaysia 89= Romania 93= Bulgaria 163= Congo
End-2005 9= Ireland 19= Singapore 22= New Zealand 35= Hungary 58= China 73= Iran 74= Vietnam 77= Russia 85= Algeria 96= Indonesia 127= Ivory Coast 182= Cuba
2007
20=Singapore 41=Hungary 42= Poland 54= China 57= Russia 76= Vietnam 77= Algeria 79= Iran 85= Indonesia 167= Ivory Coast 178= Congo 182= Cuba 185= North Korea
MH BOUCHET/CERAM-Global Finance
Higher Risk
100 80 60 40 20 0
19 85 M ar ch 87 Se pt .8 9 De c. 97 M ar ch 98 Se pt .9 8 M ar ch 99 Se pt M .99 ar ch 20 00 Se pt .01 Se pt .0 2 M ar ch 03 Se pt .03 Se pt .05 M ar ch 06
MH BOUCHET/CERAM-Global Finance
Political upheaval
19 80
19 81
19 82
19 84
0-100 semi-annual Rating of 136 countries creditworthiness based on survey of 100 leading international bankers Best : Switzerland, Germany, Netherlands, United States, United Kingdom, France, Luxembourg Singapore, Taiwan, Chile Worst: Cuba, Nigeria, Benin, Sudan, Iraq, Congo, Sierra Leone, North Korea, Albania, Angola II Global average rating as of March 2000 = 41 II Global average rating as of March 2007 = 45
MH BOUCHET/CERAM-Global Finance
Risk information provided by leading international banks. Bankers are asked to grade each of the countries on a scale from 0 to 100, with 100 representing those countries with the best creditworthiness. The sample for the study, updated every six months, ranges from 75 to 100 banks. The names of all participants in the survey are kept strictly confidential. Banks are not permitted to rate their home country. The individual responses are weighted (> importance to responses from banks with greater worldwide exposure and more sophisticated country analysis systems)
MH BOUCHET/CERAM-Global Finance
Rank
100
120
140
160
180
20
40
60
80
Higher Risk
MH BOUCHET/CERAM-Global Finance
Coup dtat
60. Tunisia 67. Morocco 68. Algeria 72. Egypt 78. Venezuela 91. Argentina 117. Bolivia 124. Gabon 134. Cameroun 153. Congo 157. RCI 166. Iraq 171. Zimbabwe
MH BOUCHET/CERAM-Global Finance
Singapore= 16 Australia= 18 Hongkong= 24 Taiwan= 26 South Korea= 28 China= 34 Malaysia= 38 Thailand= 54 India= 58
Philippines= 73 Indonesia= 76 Vietnam= 77 Pakistan= 86 Sri Lanka= 100 Laos= 132 Cambodia= 140 Myanmar= 168 North Korea= 173
MH BOUCHET/CERAM-Global Finance
Worst
Congo, Afghanistan, Mali Chad, Togo, Cambodia Yugoslavia, Cuba, RCI Albania, Haiti, Angola, Iraq, N. Korea, Sudan Nicaragua, Cuba, Zambia, Togo, Ethiopia, Myanmar, Liberia, Somalia, Zimbabwe
MH BOUCHET/CERAM-Global Finance
Ukraine Algeria
Chile Russia
Mexico
MH BOUCHET/CERAM-Global Finance
RCI
Russia
MH BOUCHET/CERAM-Global Finance
The ICRG Risk Rating System assigns a numerical value (risk points) to a predetermined range of risk components according to a preset weighted scale for each country covered by the system (PRS) The risk components are grouped into 3 categories - Political, Economic and Financial. Each Risk Category is made up of a number of Risk Components. The sum of the Risk Points assigned to each Risk Component within each Risk Category determines the overall risk for that category. The total Risk Points for each Risk Category are further combined, according to a formula, to produce a Composite Risk Rating. Very High Risk 00.0 to 49.5 points Moderate Risk 60.0 to 69.5 points Very Low Risk 80.0 to 100 points High Risk 50.0 to 59.5points Low Risk 70.0 to 79.5 points
MH BOUCHET/CERAM-Global Finance
FORECAST
60 Rating 55 50
Coup dtat
45 40
avr-99 mai-99 juin-99 juil-99 aot-99 sept-99 oct-99 nov-99 dc-99 janv-00 fvr-00 mars-00 avr-00 spt-00 sept-01 sept-02 sept-03 2006
Composite Political, Financial and Economic Risk Rating with weighted average
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
1
Czech Rep
HongKong
2
Chile China Hungary Poland
3
Israel Algeria Morocco South Africa
6
Albania
7
Bolivia Haiti
Cambodia
Cameroon
Trinidad Thailand Vietnam & Russia Tobago Romania Kuwait Mexico Mexico Bulgaria Malaysia
MH BOUCHET/CERAM-Global Finance
Guatemala
Gabon RCI
COFACE
140 countries Country rating definition:
Investment grade A1= steady economic and political situation A2= weak default probability A3= adverse circumstances may lead to worsening payment record A4= patchy payment record could be worsened by adverse economic/political developments Speculative grade: B= unsteady economic and poltical environment C= bad payment record D= high risk profile and very bad payment record
MH BOUCHET/CERAM-Global Finance
Canada= A1 Australia= A1 USA= A1 Japan= A1 Chile= A2 Korea= A2 Thaland = A3 China = A3 Mexico = A3 India = A3 Croatia=A3 Poland = A3 Roumania =A4 Tunisia= A4 Algria = A4 Brazill= A4
Cameroun= B gypt = B Russia= B Indonsia= B Turkey = B Ukraine= C Congo= C Argentina = C Iran= D Venezuela= D RCI= D Nigeria= D
MH BOUCHET/CERAM-Global Finance
2003
5,6
2004
6
2005
4
2006e
5,4
2007(e)
6
2008(p)
6,2
Inflation (%)
Solde public/PIB (%) Exportations Importations Balance commerciale Balance courante/PIB (%) Dette extrieure/PIB (%) SD/Export b&s (%) Rserves en mois d'import.
2,7
-3,4 8 10,3 -2,3 -2,9 83,7 11 2,7
3,6
-2,6 9,7 12,1 -2,4 -1,9 81,2 14,5 3
2
-3 10,5 12,5 -2 1,1 75 13,8 3,2
4,5
-2,8 11,5 14 -2,5 -2,3 70 17,3 4,5
3
-2,7 13,5 16,3 -2,8 -2,5 67 12,5 4,7
3
-2,6 14,5 17,7 -3,2 -2,8 63 11,3 4,7
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
Economic integration (trade, FDI, portfolio capital flows, income payments, receips) Technology (number of Internet users, Internet hosts, secure servers) Personnal contact (international travel, tourism, international telephone traffic, cross-border transfers) Political engagement (foreign embassies, participation in UN missions, number of memberships in international organisations)
MH BOUCHET/CERAM-Global Finance
2002
1 12
2003
1 11
2004
1 7
26 39 44 42 16 29 45 48
34 44 58 46 13 38 39 53 MH BOUCHET/CERAM-Global Finance
31 48 57 29 12 35 45 51
34 44 58 46 15 38 39 53
13. Australia 14. Norway 15. Czech Rep. 16. Croatia 17. Israel 18. France 19. Malaysia 20. Slovenia
MH BOUCHET/CERAM-Global Finance
ATKearney
MH BOUCHET/CERAM-Global Finance
0-3 scale
2,5
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
1 2 3 4 5
110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128
2008
Ranking
Suriname Nepal Mali Cameroon Tajikistan Madagascar Kyrgyz Republic Uganda Paraguay Zambia Ethiopia Lesotho Mauritania Guyana Timor-Leste Mozambique
Finland
Singapore Japan United Kingdom Netherlands Korea, Rep. Hong Kong SAR Canada Taiwan, China Austria Norway Israel France Australia
6
7 8 9 10 11 12 13 14 15 16 17 18 19
Zimbabwe
Burundi
129
130 131
Belgium
20
World Competitiveness Yearbook : annual study on the competitiveness of nations. It analyzes and ranks the ability of nations to provide an environment that sustains competitiveness Extensive coverage of 55 countries Over 300 competitiveness criteria are selected.
MH BOUCHET/CERAM-Global Finance
IMD Criteria
Over
(84 criteria)
Business Efficiency
(66 criteria)
Extent to which enterprises are performing in an innovative, profitable and responsible manner. Extent to which basic, technological, scientific and human resources meet the needs of business.
Infrastructure
(90 criteria)
MH BOUCHET/CERAM-Global Finance
USA = 1/55 2. Singapore 3. HongKong 4. Luxemburg 5. Denmark 6. Switzerland 15. China 16. Germany 20. UK 24. Japan 26. Chile 27. Inda
Competitiveness
index 2007IMD
MH BOUCHET/CERAM-Global Finance
27. India 28. France 29. Korea 30. Spain 33. Thailand 35. Hungary 38. Colombia 43. Russia 44. Romania 47. Mexico 55. Venezuela
MH BOUCHET/CERAM-Global Finance
Corruption in government bureaucracy Laws governing contracts or property rights Economic (fiscal, monetary, and tax-related) Accounting standarts Business regulations Together, these create the acronym CLEAR (Corruption, Legal, Economic, Accounting, Regulatory). A high degree of opacity in any of these areas will raise the cost of doing business and curtail the availability of investment capital. MH BOUCHET/CERAM-Global Finance
(from worst) Russia Indonesia South Korea Turkey Venezuela Ecuador India Kenya
Singapore 2. New Zealand 3. USA 4. KongKong 5. Denmark 6. UK 7. Canada 8. Ireland 9. Australia 178 countries 10. Iceland 10 indicators 11. Norway 12. Japan 15. Thailand 31. France (44 in2006) 33. Chile 83. China 88. Tunisia 91. Vietnam 106. Russia 120. India 122. Brazil MH BOUCHET/CERAM-Global Finance
1.
World Bank:
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
freedom = absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself. The Index includes a broad array of institutional factors determining economic freedom: corruption, non-tariff barriers to trade, the fiscal burden of government, the rule of law, regulatory burdens, restrictions on banks, labor market regulations, black market activities
MH BOUCHET/CERAM-Global Finance
To measure economic freedom and rate each country, the Index is based on 50 independent economic variables within 10 broad categories of economic freedom: 1. Trade policy, 2. Fiscal burden of government, 3. Government intervention in the economy, 4. Monetary policy, 5. Capital flows and foreign investment, 6. Banking and finance, 7. Wages and prices, 8. Property rights, 9. Regulation, and 10. Black market activity
MH BOUCHET/CERAM-Global Finance
Heritage Foundation: 2008 Economic Freedom Index(10 institutional and economic criteria) HongKong 2. Singapore 3. Irland 4. Australia 5. USA 6. New Zealand 7. Canada 8. Chile 9. Switzerland 10. UK 13. Netherlands
1.
Japan = 17 Korea= 41 Mexique= 44 France = 48 Thaland = 54 Tunisia= 84 Morocco= 98 Brazil= 101 Algria= 102 China = 126 Russia= 134 Venezuela = 148 North Korea = 157
France = Over-regulated labor market and overly intrusive state + statist political economy culture + protectionist trading stances + persistent obstacles to foreign takeovers of domestic companies + sluggish growth + persistently high unemployment rate + stubborn budget deficit
MH BOUCHET/CERAM-Global Finance
Fraser Institute
Since 1975 130 countries Annual Index of Economic Freedom in the world: reliable measure of cross-country differences in economic freedom, using third-party data to help ensure objectivity Criteria: government quality, legal structure, security of property rights, access to sound money, personal choice, freedom to exchange with foreigners and to compete in markets, quality of regulations and institutional strength
MH BOUCHET/CERAM-Global Finance
Source: http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=852
MH BOUCHET/CERAM-Global Finance
developed by UNDP A composite index measuring average achievement in three basic dimensions of human development-a long and healthy life, knowledge and a decent standard of living, as measured by real GDP per capita on a purchasing power parity basis.
MH BOUCHET/CERAM-Global Finance
1. Norway 2. Iceland 3. Australia 4. Ireland 5. Sweden 6. Canada 7. Japan 8. United States 9. Switzerland 10. Netherlands 11. Finland 12. Luxembourg 13. Belgium 14. Austria 15. Denmark 16. France 17. Italy 18. United Kingdom 19. Spain 20. New Zealand
154. Haiti 155. Gambia 156. Senegal 157. Eritrea 158. Rwanda 159. Nigeria 160. Guinea 161. Angola
UNDP HDI
162. Tanzania, U. Rep. of 163. Benin 164. Cte d'Ivoire 165. Zambia 166. Malawi 167. Congo, Dem. Rep. of the 168. Mozambique 169. Burundi 170. Ethiopia 171. Chad 172. Central African Republic 173. Guinea-Bissau 174. Burkina Faso 175. Mali 176. Sierra Leone 177. Niger
MH BOUCHET/CERAM-Global Finance
2000-05
79.3 80.6 80.2 77.7 80.1 79.9 81.9 77.3 80.5 78.3 78.4 78.4 78.8 78.9 77.1 79.4 80.0 78.3 79.5 79.0
2000-05
55.6 53.5 43.6 43.3 53.6 40.7 46.0 53.8 46.0 37.4 39.6 43.1 41.9 43.5 47.6 43.6
43.5
36.5 43.8 38.0
39.4
44.6 47.4 47.8 40.6
MH BOUCHET/CERAM-Global Finance
35.4
Corruption
Competitiveness
Doing Business
MH BOUCHET/CERAM-Global Finance
Objective:
investor
Means:
Country risk rating issued once a year Methodology: 4 parameters computed Sovereign financial risk Financial market risk Political risk Business environment risk
MH BOUCHET/CERAM-Global Finance
Sovereign financial risks (public debt sovereign default risk inconvertible risk) Market financial risks (systemic and volatilit risks mastering of the macroeconomic fundamentals devaluation risks) Political risks (external conflicts government stability social homogeneity) Business environment (FDI good governance labor conditions)
MH BOUCHET/CERAM-Global Finance
rating stems from weighted average of 60 variables 43 qualitatives variables 17 qualitative variables Each variable is graded from 0 (worst) to 7 (best)
MH BOUCHET/CERAM-Global Finance
Factor 1 (weight 4/10):Public debt burden in the economy, computed from 6 quantitative variables
Factor 2 (weight 4/10):Sovereign default risk, from 4 quantitative and 2 qualitative variables Factor 3 (weight 2/10):Non convertibility risk, from 2 quantitatives and 1 quantitative variables
MH BOUCHET/CERAM-Global Finance
7
6
Very low risk (eg: From 541 to 700 OCDE) Low risk From 431 to 540 Moderate risk
Rather high risk High risk Very high risk
5
4 3 2
Dangerous risk
From 1 to 160
MH BOUCHET/CERAM-Global Finance
20%
30%
MH BOUCHET/CERAM-Global Finance
Rate
From 0 to 215 From 216 to 295 From 296 to 350 From 351 to 405 From 406 to 430 From 430 to 485 From 486 to 540 From 541 to 700
MH BOUCHET/CERAM-Global Finance
MH BOUCHET/CERAM-Global Finance
Heritage Foundation PricewaterhouseCoopers established since 1985, s Opacity Index in partnership with the measures the lack of WSJ, an economic clear, accurate, formal freedom index for some and widely accepted 160 countries, both practices in a industrialized and countrys business developing. The ranking environment. As such, is based on ten socioit focuses on the political and economic relative state of criteria, including corrupt business political stability, state practices, the interference, investment transparence of the codes, regulatory legal system and the framework, institutional quality of the strength, and corruption regulatory scope. framework. It www.heritage.org measures the resulting extra risk premium that stems from additional business and economic costs. MH BOUCHET/CERAM-Global Finance www.opacityindex.com/
The Institute for Management Developments World Competitiveness Report analyses 49 industrialized and emerging economies around the world based on a far-reaching survey since 1989. Its analysis of the institutional framework addresses issues such as state efficiency, transparency of government policy, public services independence from political interference, bureaucracy as well as bribery and corruption. www.imd.ch
Freedom House since 1972 monitors the progress and decline of political rights and civil liberties in 192 countries. FH publishes an annual survey of the Progress of Freedom in the world. The ranking is based on a wide survey of regional experts, consultants, and human rights specialists. Political stability and civil liberties are ranked on a scale of 1 (best) to 7 (worst). www.freedomhouse.org/rati ngs/index.htm
The Political and Economic Stability Index of Lehman Brothers and Eurasia measures relative stability in around 20 EMCs by integrating political science theories with financial markets developments. The monthly evaluation uses both quantitative and qualitative criteria, including institutional efficiency, political legitimacy, economic performance, and government effectiveness. www.legsi.com
Political and Economic Risk Consultancy (PERC) specializes in strategic business information and analysis in East and Southeast Asia, with emphasis on corruption and business costs. Annual risk reports survey over 1,000 senior expatriates living in to obtain their perceptions of corruption, labor quality, intellectual property rights risks and other systemic shortcomings. www.asiarisk.com
MH BOUCHET/CERAM-Global Finance
Business Environment Risk Intelligence (BERI) provides a Political Risk Index assessing the social and political environment of a country. It is built on the opinion and scores provided by a hundred experts with a diplomatic or political science background. Governance quality is included into political risk analysis along with government effectiveness and social indicators. http://www.beri.com
Political Risk Services WORLD BANK: Given its risk analyses cover a unique policy dialogue with hundred countries and are more than 180 countries, updated on a quarterly the Bank has developed a basis. International comprehensive database of Country Risk Guide composite governance measures and tracks indicators, measuring corruption perception in perceptions of voice and government, law and accountability, political order, expropriation risk, stability, government as well as the quality of effectiveness, regulatory bureaucracy. These quality, rule of law, and measures stem from the corruption. subjective assessment of www.worldbank.org/wbi/go experts around the world. vernance/ http://www.prsgroup.com
MH BOUCHET/CERAM-Global Finance
The London-based Economist Intelligence Unit (EIU) provides a comprehensive -year forecasting country risk analysis on some 100 EMCs., on a quarterly basis. The EIU method flows from experts answers to a series of 77 predetermined qualitative and quantitative questions. http://www.eiu.com
To look upon governance and corruption, Moodys takes into consideration the structures of social interaction, social and political dynamics, as well as the economic fundamentals. Moodys relies on the judgment of a group of credit risk professionals to weigh the various risk factors as well as the impact of each of these factors upon business prospects.
http://www.moodys.com
Standard and Poors rating approach is both quantitative and qualitative. It is based on a checklist of 10 categories, including governance and political risk. The political risk factors gauge the impact of politics on economic conditions, as well as the quality of governance and the degree of government support in the population. S&P assigns short term and long-term ratings. http://www.standardandpoor s.com
MH BOUCHET/CERAM-Global Finance
Euromoney publishes Institutional Investors Transparency ratings of some 180 ratings are published International, a non-profit countries since 1982 on a twice a year since 1979 non-governmental semi-annual basis. The to assess the organization in Berlin, methodology is built from creditworthiness of about provides an annual survey a blend of quantitative 150 countries, based on a of corruption practices in criteria and qualitative survey of some 100 nearly 90 countries since factors coming from international bankers 1995. The Corruption surveys with about 40 perception of Perception Index is based political analysts and creditworthiness, on a wide network of economists. Political risk including economic, information sources with receives a 25% weighting, financial and sociolocal NGOs, domestic and as much as economic political stability criteria. foreign corporations, performance. Countries are The resulting score investors, and business graded on scale from 0 scales from zero (very contacts. (worst) to 100 ( best). high chance of default) www.transparency.org www.euromoney.com to 100 (least chance of default). www.institutionalinvesto r.com
MH BOUCHET/CERAM-Global Finance