Determinants of Investment Grade Status in Emerging Markets

Author/Editor:

Laura Jaramillo

Publication Date:

May 1, 2010

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2010/117

Subject:

Domestic debt Emerging and frontier financial markets External debt Monetary base Public debt

English

Publication Date:

May 1, 2010

ISBN/ISSN:

9781455200764/1018-5941

Stock No:

WPIEA2010117

Pages:

21

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