Sovereign Debt and Rating Agency Bias - Hardcover

by D. Tennant (Author), M. Tracey (Author)

Sovereign Debt and Credit Rating Bias investigates rating agencies' assignments of sovereign debt upgrades and downgrades to examine the pervasive allegations of systemic differences in rigor and accuracy of ratings ascribed to developed and developing countries.

Back Jacket

Sovereign Debt and Credit Rating Bias rejects the notion that credit rating agencies' rigorous and transparent determination of ratings leaves no room for bias, and debunks the myth that the value CRAs place on their reputational capital precludes prolonged biases. To determine the extent of CRAs' biased actions, Tennant and Tracey apply a rigorous methodology to a well-established economic model of the determinants of sovereign debt quality. They present strong evidence of bias against poor countries and demonstrate how biased rating changes could disadvantage such countries and the companies operating therein as they seek access to international capital markets. They discuss plausible explanations for the bias and suggest remedial measures that would help ensure balance in credit rating changes. This book fills an important gap by rigorously examining a long-standing but often ignored concern about the rating practices of credit rating agencies.

Author Biography

David F. Tennant is Professor of Development Finance in the Department of Economics and Associate Dean in the Faculty of Social Sciences at the University of the West Indies, Jamaica. He was previously Economist in the Financial Regulations Division of the Jamaican Ministry of Finance and Planning.