Finance Ministry Develops Comparative Rating Index of Sovereigns (CRIS); A New Index of Sovereign Credit Rating

As expected the CRIS score for Greece has dropped sharply from 74.24 in 2007 to 13.97 in 2011—a decline of 81%; and that of Ireland and Portugal have dropped by more than 14%. Interestingly, in terms of CRIS, the U.S. has seen its score rise from 78.20 to 81.81. Ironically, this is accompanied by a loss of rank from the top of the chart to the 16th position. This shows that CRIS is distinct from a percentile score which is also a relative measure of status. In 2007 the 1st rank was shared between 20 economies but by 2011 this cohort had shrunk to 15.

The improvement in CRIS scores of nations such as India, China and Indonesia are partly due to the dramatic falls of scores of some European nations leading to a deterioration of the world average by over 4.8%.

This was especially evident in the cases of Greece, Ireland, Italy, Portugal and Spain. Dramatic falls of this type across the 2007 to 2011 period include Portugal’s fall from 23rd to 74th position with an index erosion of almost 15%, Ireland’s descent from the 1st rank club to 70th position with an over 14% fall in its index value and Greece’s precipitous dive from 30th rank to 101st (last) position accompanied by an over 81% fall in index value across the same period. Italy descended from 23rd to 37th rank with an index value loss of around 0.5%.Spain moved down from 1st to 34th rank and its index value lost approximately 1.35%. Iceland also suffered a great fall from 1st rank to 61st with an index fall of about 11.5%.

Other interesting developments include China’s index value increase of about 7.3% across the 2007 to 2011 time span. Brazil’s index value increased by 11.8%, Russia’s by about 7.5% and South Africa’s by about 5.79% in the same period. All the BRICS had improvements in rank as well as index value.

Among other economies, Israel increased in terms of CRIS value from 73.01 in 2007 to 77.58 in 2011 and Saudi Arabia had a CRIS value jump from 74.24 to 78.82 across the same period. Botswana’s CRIS value increased from 73.01 to 76.25 across the 2007 to 2011 interval.

The ten highest increases in the CRIS from 2007 to 2011 were achieved by (1) Paraguay (31.26%), (2) Lebanon (22.71%), (3) Bolivia (21.2%), (4) Uruguay (18.09%), (5) Belize and Nicaragua (both 15.63%), (7) Philippines (14.26%), (8) Indonesia (12.83%), (9) Peru (12.75%) and (10) Ecuador (12.27%). In interpreting these results, it needs to be borne in mind that for countries which began with low CRIS values, the scope for improvement is more. Seventeen economies had negative growth in the CRIS across this period. The ten highest decreases were (1) Greece (-81.19%), (2) Portugal (-14.82%), (3) Ireland (-14.14%), (4) Iceland (-11.52%), (5) Belarus (-10.05%), (6) Jamaica (-7.45%), (7) Egypt (-7.16%), (8) Cyprus (-5.94%), (9) Pakistan (-5.83%) and (10) Hungary (-4.66%).


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