Country risk September 2009: A world in flux
To obtain the overall country risk score, Euromoney assigns a weighting to nine categories. These are political risk (25% weighting), economic performance (25%), debt indicators (10%), debt in default or rescheduled (10%), credit ratings (10%), access to bank finance (5%), access to short-term finance (5%), access to capital markets (5%) and forfaiting (5%).
• Political risk (25%): the risk of non-payment or non-servicing of payment for goods or services, loans, trade-related finance and dividends, and the non-repatriation of capital. Risk analysts give each country a score between 10 and zero – the higher, the better.
• Economic performance (25%): based on GNI (Atlas Method) figures per capita and on results of Euromoney poll of economic projections.
• Access to bank finance (5%): calculated from disbursements of private, long-term, un-guaranteed loans as a percentage of GNP.
Source: World Bank.
• Debt indicators (10%): calculated using these ratios from the World Bank’s Global Development Finance figures: total debt stocks to GNP, debt service to exports and current account balance to GNP. Developing countries that do not report complete debt data get a score of zero.
• Debt in default or rescheduled (10%): scores are based on the ratio of rescheduled debt to debt stocks, taken from the World Bank’s Global Development Finance figures. OECD and developing countries that do not report under the debtor reporting system score 10 and zero respectively.
• Access to short-term finance (5%): takes into account OECD consensus groups (source: ECGD) and short-term cover available from the US Exim Bank and Atradius UK.
• Credit ratings (10%): nominal values are assigned to sovereign ratings from Moody’s, Standard & Poor’s and Fitch IBCA. The higher the average value, the better. Where there is no rating, countries score zero.
• Access to capital markets (5%): heads of debt syndicate and loan syndications rated each country’s accessibility to international markets.
• Discount on forfaiting (5%): reflects the average maximum tenor for forfaiting. Countries where forfaiting is not available score zero.
Thank you
With special thanks to:
The World Bank
Credit rating agencies: Standard and Poor’s, Moody’s, Fitch IBCA
Forfaiting companies: Mezra, Swiss Forfaiting, Deutsche Forfait, London Forfaiting, HVB UniCredit, Atlantic Forfaiting
Our thanks go to the following economists/institutions, among others:
Cynthia Moskovits, Fundación de Investigaciones Económica, Latinoamericanas (FIEL)
Patricio Millan, Universidad Católica Argentina
Sam Tsiaplias, Melbourne Institute of Applied Economic and Social Research
Birgit Niessner, Erste Bank
Christian Helmenstein, Federation of Austrian Industries
Cláudio Djissey Shikida, IBMEC Business School & Department of Economics (PUC-MG)
Plamen Pantev, ISIS Sofia
Serdar Kaya, Simon Fraser University
Bernard Musyck, Frederick University
Nicholas Firzli, Canadian European Economic Council
Mauro Toldo, DekaBank
Luigi Ruggerone, IntesaSanpaolo
Cyril Widdershoven, MEPRC – Mediterranean Energy Political Risk Consultancy
Shakill Hassan, University of Cape Town
Alex Durrer, LGT Capital Management
Olena Bilan, Dragon-Capital
Yiyi Lu, Chatham House
Richard Segal
Nadina Bernecker, AKE
Denise Youngblood Coleman, CountryWatch
Peggy Riordan, Credit Suisse
Jon Levy, Eurasia Group
John Thomas, Harvard Kennedy School
Mary Lou Walsh, The PRS Group
Olufemi Babarinde, Thunderbird School of Global Management
