Country Risk Ratings
Measure the risk to a country’s long-term prosperity and economic development to supplement credit analysis
Overview
With the Country Risk Ratings, fixed income investors gain ESG insights not explicitly captured in sovereign bond ratings and traditional credit analysis.
The Country Risk Ratings measure the risk to a country’s long-term prosperity and economic development by assessing how sustainably it is managing its wealth.
- Key Benefits
Sovereign analysis
Supplement credit risk analysis by focusing on a country’s wealth and management of wealth through an ESG lens, which may not be explicitly captured in credit ratings
Portfolio analysis
Combine data from Sustainalytics’ ESG Risk Ratings on corporate bonds and Country Risk Ratings on sovereign bonds for risk assessment of fixed income portfolios
Macro-economic analysis
Combine ESG, wealth, and economic indicators for a more holistic assessment of country risk
Early warning signal
Country events analysis provides an early warning signal and can help investors manage emerging risks
Screening
Include best-in-class countries and combine with Country Screening to identify countries subject to UN, US, EU sanctions, and signatories to international norms
- How it works
1. Sustainalytics utilizes wealth data provided by the World Bank and groups a country’s assets (or National Wealth) into three categories:
Natural & Produced Capital
e.g. infrastructure, energy independence and natural resources
Human Capital
e.g. access to water and sanitation, mean years of schooling and life expectancy
Institutional Capital
e.g. rule of law, corruption and political liberties
2. A country’s ability to utilize and manage its wealth in an effective and sustainable manner is determined by:
ESG Performance
ESG Trends
ESG Events (e.g. civil conflicts, natural disasters)
By incorporating more than 30 indicators across the two steps, the Country Risk Ratings provide a comprehensive rating for each country, allowing you to compare countries’ wealth through an ESG lens
DELIVERY
Access our research through an internal or a third-party system of your choice Bloomberg, Factset and Markit