Does the Home Country of Credit-Rating Agencies Affect Sovereign Ratings?
The actions of credit rating agencies have come under intense scrutiny – in particular during the recent Global Financial Crisis and the current sovereign debt crises in Europe. The provision of accurate and unbiased sovereign ratings is crucial for the global economy as rating decisions affect the borrowing costs of states (e.g., Afonso et al. ... Read more
Ratings Matter for the Euro Area
As you all have heard, Friday was (again) S&P’s day in the limelight. The rating agency downgraded over half of the 16 Euro area countries put on credit watch negative in December 2011. A quick look at my feed shows several takes on S&P’s action: the Economist’s Free Exchange comments on the now soft-core country, ... Read more
The Broad Sovereign Downgrade
Recently I’ve spent time thinking about global bond investors, especially those conservative investors that stick with the high-quality sovereigns. I’ve got news for them: the share of high-quality investment grade sovereigns – BBB- and above is investment grade – is shrinking. Some bullet points comparing ratings in December 2007 to December 2011: From a sample of 76 emerging ... Read more