Credit Rating (Sovereign/Corporate)
A grading assigned by agencies indicating risk level of issuers.
Detailed Description
Credit Rating (Sovereign/Corporate)
What do credit ratings assess?
Credit ratings assess the creditworthiness of borrowers, indicating their likelihood of fulfilling financial obligations.
What are the two primary types of credit ratings?
The two primary types of credit ratings are sovereign and corporate.
How do credit ratings impact borrowing costs?
Higher credit ratings typically lead to lower borrowing costs, while lower ratings can result in higher costs due to increased risk.
What factors influence credit ratings?
Factors influencing credit ratings include economic conditions, fiscal policies, political stability, and the financial health of the entity.
What are some limitations of credit ratings?
Limitations include reliance on historical data, potential lag in reflecting changes, and possible conflicts of interest within credit rating agencies.