Sovereign Debt and Sovereign Credit Rating: Literature Review

Reza Tahmoorespour, Alireza Zarei, Mohamed Ariff, Meysam Safari, Shaheen Mansori


The aim of this study is to summarise the recent literature related to sovereign debt credit rating and the Credit Rating Agencies (CRA).
The ratings provided by the RAs address default risk of a sovereign borrower. These ratings are used to assess the ability of sovereigns in meeting their financial obligations. Simply put, these ratings are the RAs opinions about the sovereigns’ financial strength or lack of strength. Moreover, the RA activities may lead to lower degrees of information asymmetry in financial markets being judged by the amount of sovereign information they often provide and disclose to the investors.

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This work is licensed under a Creative Commons Attribution 4.0 International License.