Sovereign Entities

Course Overview

This interactive training course will highlight the drivers of sovereign and country ratings thus enabling the analyst to identify key data and appreciate the information contained in rating reports.

The “Sovereign Entities” course offers an engaging dive into the intricate world of sovereign and country ratings, designed for professionals within the Loan Department or those seeking a deeper understanding of sovereign risk.

Through interactive sessions, participants will explore the nuances of sovereign versus country risk, delve into the reasons behind sovereign defaults, and understand the crucial role of data quality and transparency in risk assessment. The training course provides an in-depth look at credit rating reports, highlighting the fundamentals of credit ratings, the significance of country ceilings, and key economic indicators that influence sovereign risk ratings.

Additionally, the interconnectedness of various economic actors and the potential contagion effects on sovereign creditworthiness are examined, emphasising the relationships between sovereigns, financial institutions, sub-sovereign entities, and the broader economy.

The programme aims to equip participants with the knowledge to interpret rating reports effectively, appreciate the drivers of sovereign and country ratings, and assess the implications of sovereign risk on global financial stability.

Learning Objectives

• Understand the fundamental differences between sovereign risk and country risk, including the historical context of sovereign defaults and their causes, to appreciate the complexities of sovereign risk assessment. 
• Learn how to interpret and appreciate the information contained in credit rating reports, including the fundamentals of credit ratings, rating definitions, scales, and the concept of country ceilings, to effectively analyse sovereign and country ratings. 
• Gain insights into why sovereign entities usually repay their debts, the circumstances under which defaults may occur, and the role of data quality, transparency, and forecasting models in assessing sovereign risk. 
• Explore the notion of interconnectivity among various economic actors, including the impact of banking system support and State-Owned Enterprises (SOEs) on sovereign credit ratings, to understand how vulnerabilities and financial crises can spread within and across countries. 
• Understand the key economic indicators, benchmarks, and early warning signals that are critical in assessing sovereign risk and predicting potential defaults or financial instability. 
• Develop the ability to assess the potential impact of off-balance sheet liabilities on sovereign creditworthiness and appreciate the contagion effect on sovereign credit ratings through a comprehensive understanding of the linkages among sovereign, banking, corporate, housing sectors, and other countries.