September’s Country Credit Ratings Recover The global economy has been hit by the worst recession since World War II, but early signs of recovering are starting to appear.
Sovereign creditworthiness has rebounded modestly in the past six months, according to Institutional Investor¹s exclusive Country Credit survey.
Although most ratings remain well below the levels of a year ago, the latest figures reflect a belief that the global economy "has bottomed out - things can only get better," says Sherman Hui, a risk analyst at Canadian Imperial Bank of Commerce in Toronto.
The improvement is likely to be uneven, though. Countries in Asia and Latin America, which many economists expect to lead a global recovery, have seen some of the biggest increases among all countries in their credit ratings in the latest six months. The U.S. also enjoys a modest bounce, suggesting that many analysts believe that the country that dragged the world into recession will help pull everyone out of it. By contrast, the ratings of most European countries have taken a further tumble.
The average credit rating of all 178 countries included in the survey rises to 45.7 on a scale of zero to 100. That's up 0.7 point from the previous survey, in March, but down 1.3 points from the peak level achieved in September 2008.
How the Ratings Are Compiled The Country Credit ratings developed by Institutional Investor are based on information provided by senior economists and sovereign-risk analysts at leading global banks and money management and securities firms. The respondents have graded each country on a scale of zero to 100, with 100 representing the least likelihood of default. We also asked participants to rank ten political, economic and financial indicators in order of their importance for each region and for selected countries. Participants’ responses were weighted according to their institutions’ assets. Names of respondents are kept strictly confidential.
The September 2009 Country Credit survey was conducted by II staff under the guidance of Senior Editor Jane B. Kenney.