Determinants of Investment Grade Status in Emerging Markets

May 1, 2010

Preview Citation

Format: Chicago

Laura Jaramillo. Determinants of Investment Grade Status in Emerging Markets, (USA: International Monetary Fund, 2010) accessed December 22, 2024

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.

Subject: Domestic debt, Emerging and frontier financial markets, External debt, Monetary base, Public debt

Keywords: Emerging market, Explanatory variable, GDP, Sc, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/117
Stock No:

WPIEA2010117
ISBN:

9781455200764
ISSN:

1018-5941

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