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.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies publishes a wide spectrum of research and technical articles as well as reviews, experiments, experiences, modelings, simulations, designs, and innovations from engineering, sciences, life sciences, and related disciplines as well as interdisciplinary/cross-disciplinary/multidisciplinary subjects. Original work is required. Article submitted must not be under consideration of other publishers for publications.

Sovereign investment grade status is often associated with lower spreads in international markets. Using a panel framework for 35 emerging markets between 1997 and 2010, thispaper finds that investment grade status reduces spreads by 36 percent, above and beyond what is implied by macroeconomic fundamentals. This compares to a 5-10 percent reduction in spreads following upgrades within the investment grade asset class, and no impact formovements within the speculative grade asset class, ceteris paribus. While global financial conditions play a central role in determining spreads, market sentiment improves with lower external public debt to GDP levels and higher domestic growth rates.

This 2011 Article IV Consultation—Selected Issues paper focuses on estimating potential output and the output gap and spillovers from agriculture in the case of Uruguay. It introduces additional economic information and theory to estimate potential output, shedding some light on the discussion of current monetary and fiscal policies. The objective is to take advantage of economic data to disentangle the most recent economic performance by introducing multivariate techniques. The paper also presents an overview of the labor market and pension system of Uruguay.

The Certified Credit Research Analyst (CCRATM) is a comprehensive global education program designed to give an expert level understanding of credit markets to fresh graduates and experienced professionals. It integrates the fundamentals of financial analysis, credit analysis, rating methodologies, credit strategy and structuring. It offers the tools a candidate needs to occupy key positions in the world of finance, private banking, credit ratings and fixed income domain

This paper presents empirical evidence on the effects of achieving investment grade on borrowing costs for the sovereign and the private sector. This study provides background information on sovereign credit ratings and compares Panama’s key macroeconomic and institutional characteristics with those of other emerging markets. Statistical evidence on the reduction in sovereign spreads associated with obtaining investment grade status and the impact of the sovereign’s upgrade on corporate financing costs were also discussed. The model is estimated using a variety of panel regression techniques.

We analyze the relationship between global and country-specific factors and emerging market debt spreads from three different angles. First, we aim to disentangle the effect of global and country-specific developments, and find that while both country-specific and global developments are important in the long-run, global factors are main determinants of spreads in the short-run. Second, we investigate whether and how the strength of fundamentals is related to the sensitivity of spreads to global factors. Countries with stronger fundamentals tend to have lower sensitivity to changes in global risk aversion. Third, we decompose changes in spreads and analyze the behavior of explained and unexplained components over different periods. To do so, we break down fitted changes in spreads into the contribution of country-specific and global factors, as well as decompose changes in the residual into the correction of initial misalignment and an increase/decrease in misalignment. We find that changes in spreads follow periods of tightening/widening, which are well-explained by the model; and the dynamics of the components of the unexplained residual follow all the major developments that impact market sentiment. In particular, we find that in the periods of severe marketstress, such as during the intensive phase of the Eurozone debt crisis, global factors tend to drive changes in the spreads and the misalignment tends to increase in magnitude and its relative share in actual spreads.

This paper analyzes transmission of the great recession from advanced to emerging economies. The widespread impact of the global financial crisis of 2008–09 has spurred researchers to examine how the associated recession was transmitted from advanced to emerging economies. Recent IMF studies have found that precrisis vulnerabilities such as large current account deficits, rapid credit growth, and high levels of short-term debt were strongly associated with the magnitude of spillovers. Trade, bank lending, and financial markets served as key transmission channels.

This Selected Issues paper on Colombia shows that achieving investment grade status would help lower financing costs for the sovereign, and expand the pool of potential buyers of the Colombian economy. Colombia’s debt levels as of end-2008 were broadly similar to the average for investment grade emerging markets, suggesting that other indicators are taken into account in rating agencies’ assessments. A stronger process of fiscal consolidation that results in a significant decline in public sector debt could help compensate the structural weaknesses.

This Selected Issues paper analyzes reforms to Mexico’s fiscal framework. Mexico’s resilient economic performance would be consolidated by increasing fiscal policy buffers and preparing for challenges associated with long-term budget pressures. In the short term, reducing public debt levels can create space to implement countercyclical fiscal policies and reduce exposure to high financing and hedging costs, which would protect Mexico’s credit rating at times of distress. The paper highlights that recent fiscal reform is designed with these policy objectives in mind, to build on the strengths of the previous fiscal framework.