Computing the credit rating

Question

List some of the factors does Standard & Poor’s analyzes in computing the credit rating it assigns a sovereign government?

Answer 1

While rating the sovereign government, S&P’s analysis centers over examination of degree of economic risk and political risk.  In assessing political risk, S & P computes the stability of the social environment, political system, and international relations with other countries. Factors during examining the economic risk have sovereign’s external financial position, balance of payments flexibility, management of the economy, economic structure and growth, and economic prospects.  Rating which is assigned to a sovereign is mainly important since it typically presents the ceiling for ratings S&P may assign an obligation of an entity domiciled in that particular country.