Country risk March 2001 results tables

Methodology

To obtain the overall country risk score, Euromoney assigns a weighting to the nine categories listed below. The best underlying value per category achieves the full weighting (25, 10 or 5); the worst scores zero and all other values are calculated relative to these two. The formula used is the following: A – (A / (B-C)) x (D-C), where A = category weighting; B = lowest value* in range; C = highest value* in range, D = individual value.

* NB for Debt indicators and Debt in default, B and C are reversed in the formula, as the lowest score receives the full weighting and the highest gets zero.

Political risk (25% weighting): 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. This does not reflect the creditworthiness of individual counterparties.

Economic performance (25%): based (1) on GNP* figures per capita and (2) on results of Euromoney poll of economic projections, where each country’s score is obtained from average projections for 2001 and 2002. The sum of these two factors, equally weighted, makes up this column – the higher the result, the better.

* GNP figures were unavailable for the following countries, so GDP data were used instead: Afghanistan, Antigua&Barbuda, Bahamas, Bahrain, Cuba, Cyprus, Iraq, North Korea, Kuwait, Liberia, Libya, Macau, Myanmar, New Caledonia, Oman, Qatar, Singapore, Somalia.

Debt indicators (10%): calculated using these ratios from the World Bank’s Global Development Finance 2000: total debt stocks to GNP (A), debt service to exports (B); current account balance to GNP (C). Scores are calculated as follows: A + (B x 2) – (C x 10).

The lower this score, the better. Figures are for 1999.

Because of lack of consistent economic data for OECD and rich oil-producing countries, these score the full weighting, except where they report debt figures to the IMF.

Developing countries which do not report complete debt data get 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 2000. The lower the ratio, the better. OECD and developing countries which do not report under the debtor reporting system (DRS) score 10 and zero respectively.

Credit ratings (10%): nominal values are assigned to sovereign ratings from Moody’s, S&P and Fitch IBCA. The higher the average value, the better. Where there is no rating, countries score zero.

Access to bank finance (5%): calculated from disbursements of private, long-term, unguaranteed loans as a percentage of GNP. The higher the result, the better. OECD and developing countries not reporting under the DRS score five and zero respectively. Source: the World Bank’s Global Development Finance 2000.

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 NCM UK. The higher the score, the better.

Access to capital markets (5%): heads of debt syndicate and loan syndications rated each country’s accessibility to international markets at the time of the survey.

Discount on forfaiting (5%): reflects the average maximum tenor for forfaiting and the average spread over riskless countries such as the US. The higher the score, the better.

Countries where forfaiting is not available score zero. Data from Deutsche Bank, Standard Bank and WestLB.