The Optimal Research Of Sovereign Credit Rating Index

Sovereign credit rating means the rating agencies select certain procedures and methods to value sovereign authority’s political, economic, social risk and assessed credit rating. For years, the information of sovereign credit rating plays a decisive role on the measure of the national economies’ risk, the cost of national bond financing, the evaluation and other aspects of the regional economic situation. In December2009, with the Greek debt crisis, the three major rating agencies lowered the sovereign credit of Greece, Iceland, Ireland, Italy, Portugal, Spain and other EU countries rapidly which deepened the debt crisis of the EU and led to turbulent global markets. Sovereign credit crisis is becoming the most serious challenges for many countries, and also one of the most important risks for the current revival of the world economy. In subprime crisis, Ratings agencies’ inaccurate rating results on the CDS and other financial derivative products have long suffered criticism, the sovereign credit rating on the EU’s "bombing" has caused widespread controversy too. On the other hand, whether China’s sovereign credit rating has been underestimated is the issue focused in domestic scholars’ discussion for a long time. Based on the reality, the author holds the view that it is necessary to systematically introduce the sovereign risk, the sovereign credit rating and the sovereign ratings models of the rating companies, and then revise and improve the sovereign rating indexes. This article is divided into five chapters; the main content and structure of each chapter are as follows:First, This paper will propose the background and significance of sovereign credit rating and systematically expound the research literatures of sovereign credit rating. Second, this paper will give the introduction of sovereignty risk and sovereign credit rating, including the theoretical basis of sovereign credit rating. Third, this paper will analyze the major agencies’sovereign rating models and indexes system. Forth, this paper uses two empirical tools to analyze the indexes system and results of sovereign rating. At last, this paper intends three ways to optimize the present sovereign credit rating.