Principles of Rating Estimation in Emerging Countries

P. 67–92.

Karminsky A. M., Grishunin S.

Ratings in emerging markets can serve as part of the early warning systems to reflect the weak signals of potential risks to the entity from the environment. Emerging markets have specific features that rating agencies usually consider in judgments of their credit ratings. They are underpinned by the higher volatility, exposure to sovereign issues, weaknesses in institutional governance, and lower rating transparency. Emerging markets are served by both international and national rating agencies. The latter assign national scale ratings which are the opinions of the relative creditworthiness of issuer or the entity relative to the national benchmark. National scale ratings primarily focus on niche markets where they draw on familiarity with specific domestic economic and political circumstances and thus cannot be directly compared to international scale ratings. In the field of the regulation of rating activities, emerging countries follow the regulatory trends that have been established in Europe and the USA. However, the quality and depth of regulation depends significantly on the maturity of the rating industry of the particular countries.

Keywords: ratings mapping, emerging markets, credit ratings

In book

Risk Assessment and Financial Regulation in Emerging Markets' Banking: Trends and Prospects

Springer, 2021.