Determinants of Investment Grade Status in Emerging Markets

22 Pages Posted: 4 Jun 2010

See all articles by Laura Jaramillo

Laura Jaramillo

International Monetary Fund (IMF)

Date Written: April 2010

Abstract

Emerging market countries seek investment grade status to lower financing costs for the sovereign, expand the pool of potential investors to institutional investors, and allow corporates the possibility of reducing their borrowing costs. Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds that, to a large extent, investment grade rating assignments can be explained by a handful of variables. The results also suggest that efforts by emerging markets to increase the likelihood of an upgrade should focus on debt indicators rather than the other key determinants of investment grade status.

Keywords: Economic models, Emerging markets, Investment, Public debt, Sovereign debt

Suggested Citation

Jaramillo, Laura, Determinants of Investment Grade Status in Emerging Markets (April 2010). IMF Working Paper No. 10/117, Available at SSRN: https://ssrn.com/abstract=1620248

Laura Jaramillo (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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