European rating agency. Objective, transparent, independent.
European rating agency. Objective, transparent, independent.

Sovereign Rating

What are sovereign ratings?

Investors value a variety of opinions. They want to know how experts assess the ability and willingness of a state to meet its financial obligations fully and on time. In times of political uncertainty, assessments of a state's creditworthiness are of particular importance, since risks can arise rapidly. Our sovereign ratings provide guidance and sensitize country-specific risks.

Creditreform Rating carries out sovereign ratings for a constantly growing number of countries. Our sovereign ratings allow a comparable assessment of the creditworthiness for countries and their level of development. Overall, our sovereign ratings cover 93% of the global gross domestic product. In addition to the creditworthiness of the state as borrower (issuer rating), we assess specific debt instruments or financial liabilities issued by a state in local or foreign currency.

How is a sovereign rating conducted?

Creditreform Rating's sovereign ratings are carried out by highly qualified analysts, who consider all the information available and deemed relevant, which may influence the risk of full and timely repayment of principal and interest, into account. The analytical framework for the quantitative and qualitative analysis of a sovereign's creditworthiness is provided by Creditreform Rating's sovereign rating model, which considers the country-specific characteristics.

Rating Methodology:

CRAS – Country Risk Assessment Score

What is CRAS?

CRAS stands for Country Risk Assessment Score. CRAS is a risk measure that can assume values between 1 and 10 and relates to the business environment and borrowers / business partners in a specific country. It provides insights into the country risks of foreign business relationships and is also a good indicator of the country-specific default risk. The CRAS is based on the established and internationally recognized sovereign rating methodology of Creditreform Rating. The CRAS benefits from the expertise of the analysts, who are in ongoing contact with the authorities responsible for sovereign ratings in the countries rated by Creditreform Rating.

What is the difference to a sovereign rating?

Whereas a sovereign rating refers to the creditworthiness of a specific country, the CRAS focuses on the country risk, which is defined as the market or loss risk to which a company in the context of a business relationship (export, investment, financing) with a foreign market player is exposed. Country risk therefore also includes the risk that payments cannot be made due to economic or political instability, e.g. due to fluctuations within an economic cycle or governmental interference.

What are the benefits for my company?

Foreign business involves significant costs, not only for setting up a distribution network or product adaptations, but especially for the analysis and risk management of foreign markets - both before and after market entry. The CRAS allows measurable country risks worldwide and provides an overview of the relevant information to your businesses relationships in 187 countries in a simple, quick and convenient format. Recent political events illustrate the importance of a holistic risk management to obtain an overview of globally interconnected events and to sensitize corporate activities for country-specific risks.

 

Further information is available at: www.countryrisk.de