IHS launched today its Enhanced Short Term Sovereign Risk Service which provides detailed analysis of the short-term creditworthiness of all 204 governments worldwide, a vital new tool for evaluating risk in the current global financial turmoil.
This unique new service provides significantly enhanced analysis on the creditworthiness all sovereigns worldwide over the short term, one year or less, and associated risk ratings alongside the existing IHS Medium Term view.
These short term ratings focus on threats to liquidity as well as creditor and political relationships and are an “early warning tool” giving notice of financial problems in a country well before medium term ratings signal difficulties are occurring, said Jan Randolph, director of sovereign risk at IHS.
“The extension of IHS Sovereign Ratings into the short term from the industry benchmark medium term, serves an important but neglected space in the rating industry that is either unoccupied or poorly covered;” Randolph said
“With this new service, IHS is the only ratings provider that now covers sovereign risk down the full timeline and for all countries in the world.”
The mix of criteria and factors that make up the new short term model’s structure emphasise a country’s liquidity, creditor and political relations that are deemed more pertinent for the short term risk horizon, making it especially useful for trade finance.
The quantitative drivers behind the short term model make up 60% of the weight of the rating assessment and assess 6 key liquidity ratios. The qualitative assessment, which makes up 40% of the weighting, assesses two key creditor relationship issues -- transfer payments delays and the interest arrears position; and key external creditor and political relations.
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