Determinants of Investment Grade Status in Emerging Markets
May 1, 2010
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Summary
Emerging market countries seek investment grade status to lower financing costs for the sovereign, expand the pool of potential investors to institutional investors, and allow corporates the possibility of reducing their borrowing costs. Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds that, to a large extent, investment grade rating assignments can be explained by a handful of variables. The results also suggest that efforts by emerging markets to increase the likelihood of an upgrade should focus on debt indicators rather than the other key determinants of investment grade status.
Subject: Domestic debt, Emerging and frontier financial markets, External debt, Monetary base, Public debt
Keywords: emerging market, explanatory variable, GDP, sc, WP
Pages:
21
Volume:
2010
DOI:
Issue:
117
Series:
Working Paper No. 2010/117
Stock No:
WPIEA2010117
ISBN:
9781455200764
ISSN:
1018-5941
