The Analysis Of Sovereign Risk Based On Sovereign Debt Crisis

Since financial crisis in 2008, sovereign debt crisis broke up in many countries, sovereign debt crisis affecting regional economic development and financial stability in main factors. The factors that lead to sovereign risk in too complex, such as the various elements of risk analysis have different weight in different countries. It is hard to form same standards, and many factors can not be quantitative analysis, so the different rating agencies lead to different results in sovereign risk rating in the qualitative analysis. The main objective of this article is to form a uniform standard on measuring sovereign risk and improve the ability on prediction of sovereign credit default. Then are the main contents of this paper.First, review the theories of sovereign credit risk analysis and compare the various methods on sovereign risk analysis, and point out the advantage and disadvantage of each method. Meanwhile, make the distinction between the definition of sovereign risk and country risk. And define the concept of sovereign that will be sued in this paper. Then we introduced the idea of this study.Secondly, the framework of different sovereign risk analysis methods are discussed, and we point out the main theoretical and target of this paper.The method of measuring sovereign risk is based on structural credit risk models, and makes the model conform to the characteristics of countries. This models is different from traditional sovereign credit risk, the traditional sovereign credit risk base on macroeconomic indicators and the expected, unable to quantify the impact of capacity and capacity, static public financial data, financial system stability, financing capacity, international trade balance, current account financing, capital flows and so on. The relationships between these factors are different to predict, so the capacity of traditional sovereign credit risk analysis methods are decline. Sovereign debt default in order to increase predictability of predicts and improves the accuracy of sovereign risk analysis. In the next chapter, build a market-based balance sheet for sovereign sate to match the characteristics of credit risk analysis, depend on the differences between sovereign states and enterprises changes the original credit evaluation model. Then derive the indicators that can measure sovereign credit risk, including the default distance, probability of default and credit spreads. In the fourth part of the paper I use the date of 12 emerging economics to verify the credit risk indicators, testing the stability of the indicators, as well as inception and analysis the practical value of these indictors.Finally, introduce the concept of debt crises and the solutions methods of sovereign debt default. By now the method of solution the sovereign debt fault is international organization assistance. Then I will analysis and discussed some proposed of solving the debt crises. Then will introduce the duties and rights of the factors in the debt crises and point out that the fundamental purpose of methods is to recovery the confidence to the debtor country.In current the traditional sovereign rating agencies rely on the monopoly of sovereign risk rating methods have become outdated in a recession or decline in economic cycle stage. The shortcomings and deficiencies of the financial fully reveal in the financial crises. Therefore, the sovereign credit risks analysis and forecasting need objective, scientific and equitable rating models. Then it will be better in the international financial markets.