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Concept
Credit rating
Summary
A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.
The credit rating represents an evaluation from a credit rating agency of the qualitative and quantitative information for the prospective debtor, including information provided by the prospective debtor and other non-public information obtained by the credit rating agency's analysts.
Credit reporting (or credit score) – is a subset of credit rating – it is a numeric evaluation of an individual's credit worthiness, which is done by a credit bureau or consumer credit reporting agency.
A sovereign credit rating is the credit rating of a sovereign entity, such as a national government. The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors when looking to invest in particular jurisdictions, and also takes into account political risk.
The "country risk rankings" table shows the ten least-risky countries for investment . Ratings are further broken down into components including political risk, economic risk. Euromoney's bi-annual country risk index monitors the political and economic stability of 185 sovereign countries, with Singapore emerging as the least risky country since 2017 – it is also the one of the only few countries in the world as well as the only in Asia to achieve a AAA sovereign credit rankings from all major credit agencies.
Results focus foremost on economics, specifically sovereign default risk or payment default risk for exporters (also known as a trade credit risk). A. M. Best defines "country risk" as the risk that country-specific factors could adversely affect an insurer's ability to meet its financial obligations.
A rating expresses the likelihood that the rated party will go into default within a given time horizon. In general, a time horizon of one year or under is considered short term, and anything above that is considered long term.
Official source
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