Bangkok--16 Feb--Standard & Poor's
The number of sovereign governments seeking new ratings is on track to reach as many as 50 over the next 10 years as demand increases for more financial transparency in emerging markets, according to a report published today by Standard & Poor's Ratings Services.
The Credit FAQ, titled "Mapping The Future Of Sovereign Credit Ratings," was published on Feb. 15, 2007. The report looks at the prospects for new sovereign ratings after a year in which Standard & Poor's continued to expand its coverage of the sovereign universe.
Standard & Poor's now has credit ratings on 113 sovereigns, an increase of 14 in less than three years. Sovereigns rated for the first time in 2006 include the Republic of Seychelles (on Sept. 14), the Republic of Kenya (on Sept. 8), the Republic of Fiji Islands (Aug. 25), and the Federal Republic of Nigeria (Feb. 6). The total represents a dramatic increase from just seven sovereign ratings in 1975, and accounts for more than one-half of the 192 states that make up the United Nations.
"Sovereign ratings are no longer the preserve of governments that are seeking to access international bond markets," said David Beers, global head of Sovereign and International Public Finance ratings at Standard & Poor's. "Demand for new ratings is being driven by sovereigns that see a variety of advantages in having a globally accepted benchmark of creditworthiness, and not just by those sovereigns that plan to issue cross-border debt."
The report highlights that rated bank loans and local currency bonds are now commonplace, and that ratings play an important role in the debt exchanges many governments use to emerge from default. Standard & Poor's ratings can also help to build a deeper local capital market, foster private sector access to cross-border finance--including foreign direct investment--and assist with greater public sector financial transparency. New ratings across the credit spectrum are likely to be assigned to governments in the Caribbean, South and Central Asia, the Pacific, and sub-Saharan Africa in the coming decade.
International organizations are playing a significant role in generating interest in ratings. The United Nations Development Programme, for instance, has joined with Standard & Poor's in an initiative to facilitate sovereign ratings in sub-Saharan Africa and other regions. In the past three years, this partnership has led to new ratings on eight governments in sub-Saharan Africa, two in Europe, and one in Asia, and several more are expected in 2007.
"Many governments in Africa and other regions have launched wide-ranging economic and financial reforms, and they see that credit ratings can help support that effort," noted Mr. Beers. "It is a vital step in helping to mobilize the private sector capital essential for their economic development."
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office Hotline (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4017. Members of the media may also contact the European Press Office by sending an e-mail to [email protected] .
Media Contact:
David Wargin, New York (1) 212-438-1579
[email protected]
Analyst Contact:
David T Beers, London (44) 20-7176-7101