Country risk methodology
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Country risk methodology

Country risk March 2007: Global economy deals with worries amidst the prosperity
Country risk results

March 2007 Euromoney Country Risk Methodology

-------------------------------------------------------------------   For any questions relating to Euromoney's Country Risk Assessment please contact Paul Pedzinski at -------------------------------------------------------------------  

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%), forfaiting (5%).

• 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.

• Economic performance (25%): based (1) on GNI (Atlas Method) figures per capita and (2) on results of Euromoney poll of economic projections.

• Debt indicators (10%): calculated using these ratios from the World Bank's Global Development Finance 2006: total debt stocks to GNP (A), debt service to exports (B); current account balance to GNP (C). Developing countries which 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 2006.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, Standard & Poor’s 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.

Source: World Bank's Global Development Finance 2006.

• 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

• 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.

We would like to thank Simon Lay at London Forfaiting, Mezra Forfaiting, David Locking at Standard Bank, and West LB who kindly supplied data.

• Regional rankings

To obtain this ranking the overall Global Country Risk results were broken down by region. In addition Transparency International's Extended Corruption Perception Index was combined with the overall ranking to create a score out of 105. This combined total was then scaled down to a score out of 100. The difference in ranking and overall score between the original ranking and that incorporating the CPI data has been incorporated in the results.

We would like to thank Transparency International who kindly supplied the data as published in their Corruption Perceptions Index 2006 A CPI 2006 Score relates to perceptions of the degree of corruption as seen by business people, academics and risk analysts, and ranges between 10 (highly clean) and 0 (highly corrupt). The Transparency International Corruption Perceptions Index 2006 charts levels of corruption in 183 countries.

No CPI scores were available for the Marshall Islands, Micronesia, New Caledonia, the Solomon Islands, Tonga, and Vanuatu and they were therefore not included in the regional CPI adjusted rankings.

Please contact Paul Pedzinski on 44 (0) 20 7779 8233 or with any questions. 

Our thanks go to the analysts and economists and institutions below who contributed to the Political Risk and Economic Performance ratings and did not wish to remain anonymous. 

Barbara Huynh-Dernovsek, UBS AG; 

Claudia Zauchinger, Erstre Bank;

Kate Davies, D&B;

Alex Durrer, LGT Capital Management;

Dominik Thiesen, Dresdner Bank AG ;

Thierry Apoteker, TAC Applied Economic and Financial Research;

William Dugan, Summit Analytical Associates;

Ladan Mahboobi, Royal Bank of Canada.;

Sylvia Griesman at Coface at;

Luigi Ruggerone, Banca Intesa;

Saruhan Hatipoglu, Business Environment Risk Intelligence (BERI);

Stefan Frank, Helaba ; Hans Slock, ONDD;

Cyril Widdershoven, Mediterranean Energy Political Risk Consultancy;

William Dugan, Summit Analytical Associates;

Takeshi Shigeoka, Nomura Securities;

Richard Segal, Argo Capital;

YiYi Lu, The Institute of International Affairs, Chatham House;

Mauro Toldo, DekaBank; 

Olena Bilan, Dragon Capital;

Naoko Oka, Sumitomo Shoji Research Institute; 

Gerhard Kinzelberger, Oesterreichische Kontrollbank AG;

Plamen Pantev, Institute for Security and International Studies (ISIS);

Arzesh Afarin Pydar; 

Marco Lier, Swiss RE;

Robert Barlow, Stuart Ashworth, WILLIS.; 

Denise Youngblood-Coleman, Robert Kelly, Ryan Jennings, CountryWatch Inc;

Simon Sole, Exclusive Analysis Limited; 

James McLeod-Hatch and team, AKE Ltd.; 

Annick Trottier, Global Insight;

Terry Emerson, KBC;

Douglas Goold, Canadian Institute of International Affairs;

Nandita Reisinger-Chowdury, RZB;

Vladimir Gersamia, Merrill Lynch;  

Henry Mo, Credit Suisse;

Donna Winters, Strategic Forecasting

David Wall, Chatham House;

John Levy and Sebastian Spio-Garbrah , Eurasia Group;

Hans Holzhacker, Unicredit New Europe Research Network;

Serdar Kaya,;

Harald Kreuzmair, RZB

Alexander Pick and Bruce Douglas: LatinNews;

Francis Nicollas, Credit Agricole;

Llewellyn D. Howell, Asia Pacific Risk Institute;

Maxine Koster, Credit Suisse.

We would also like to thank the Royal Institute of International Affairs (RIIA) at Chatham House in London for providing access to their facilities, experts and speakers.

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