Rating the rating agencies: anticipating currency crisis or debt crisis?

Article Abstract:

The question whether sovereign ratings predict financial crisis is again addressed and reveals that ratings do not predict currency crisis and are instead downgraded after the event. The access to international capital markets is halved when sovereign debt crisis raises spreads higher than 10 percentage points causing sovereign distress, which can last between five months to nine quarters. Lagged ratings and ratings changes are useful in predicting sovereign distress in the next year.

Science & research, Capital market, Capital markets, Financial crises

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The importance and subtlety of credit rating migration

Article Abstract:

Bond investors and other buyers of credit-risk derivatives, as banks, utilize this market to mitigate a possible loss in their portfolios. The ultimate outcome of the move will be decreased costs of credit. Purchasers of credit derivatives usually are banks that aim to eradicate the default hazard of their exposures or to diminish exposure in specific sectors or locations.

Banking Institutions, Depository Credit Intermediation, DEPOSITORY INSTITUTIONS, Economic aspects, Banks (Finance), Bonds, Bonds (Securities)

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Similar abstracts:

• Abstracts: How rating agencies achieve rating stability. Informational efficiency of credit default swap and stock markets: the impact of credit rating announcements

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