Public Finance

Scope provides investors with sovereign and sub-sovereign ratings.These ratings reflect the relative capacity and willingness to honour existing and future debt obligations of the sovereign or sub-sovereign to private creditors on time and in full.

Scope's ratings of a sovereign are a forward-looking assessment of the ability and willingness to honour debt obligations to private-sector creditors in full and on time. Ratings are assigned to the issuer, i.e. the sovereign, and its debt instruments. Scope assigns local-currency ratings and foreign-currency ratings, using its long-term and short-term rating scales.

In assigning a sovereign issuer rating, Scope incorporates the most significant factors that affect the risk of upholding timely and full payment of interest and principal in the future. Scope's rating methodology looks at a broad range of economic, fiscal, financial, institutional, and political factors to assess the government's ability and willingness to service its debt obligations.

Scope's revised sovereign rating methodology provides added analytical value through:

  • comprehensive analysis using both quantitative and qualitative determinants of sovereign risk;
  • forward-looking rating framework explicitly incorporating five-year forecasts;
  • first-time inclusion of financial stability risk to explicitly account for risks stemming from the banking sector; and
  • rigorous rating analysis using sophisticated scoring systems to enhance transparency.

To structure the rating process and ensure comparability across the peer group, Scope divides sovereign analysis into five broad-based analytical categories, each of which contains a set of quantitative and qualitative considerations:

  • Domestic economic risk
  • Public finances risk
  • External economic risk
  • Financial stability risk
  • Institutional and political risk