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Journal of Economics and Finance

, Volume 27, Issue 1, pp 56–74 | Cite as

Understanding the determinants of sovereign debt ratings: Evidence for the two leading agencies

  • Antonio Afonso
Article

Abstract

An analysis of the possible determinants of sovereign credit ratings assigned by the two leading credit rating agencies, Moody's and Standard and Poor's, is conducted in this paper by using linear, logistic, and exponential transformations of the rating scales. Of the large number of variables that can be used, the set of explanatory variables selected in this study is significant in explaining the credit ratings. Namely, six variables appear to be the most relevant to determining a country's credit rating: GDP per capita, external debt, level of economic development, default history, real growth rate, and inflation rate.

Keywords

Percent Level Credit Rating Rating Level Budget Balance External Debt 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Academy of Economics and Finance 2002

Authors and Affiliations

  • Antonio Afonso
    • 1
  1. 1.Department of Economics and CISEP, Instituto Superior de Economia e GestãoTechnical University of LisbonLisbonPortugal

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