Published on 13 September 2021
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Sovereign credit ratings during the Covid-19 pandemic

This paper is the first to investigate the response of the three largest credit rating agencies to Covid-19, & finds that the economic outlook of a country & government’s response to the health crisis, & not the severity of the pandemic itself, determines the intensity of negative rating actions.

Using 603 sovereign rating actions by the three leading global rating agencies between January and March 2021, we show that severity of sovereign ratings actions is not affected by the intensity of the Covid-19 health crisis (proxied by case and mortality rates).

This report finds that economic repercussions of the pandemic such as economic outlook of a country and governments’ response to the health crisis, and not the severity of the pandemic itself, determine the intensity of negative rating actions.

Contrary to expectations, credit rating agencies pursued mostly a business-as-usual approach and reviewed sovereign ratings when they were due for regulatory purposes rather than in response to the rapid developments of the pandemic.

Despite the disappointing reaction to the ongoing pandemic, sovereign rating news from S&P and Fitch still conveyed price-relevant information to the bond markets.

Read the blog by Dr Moritz Kraemer

This working paper is now published in the International Review of Financial Analysis: Volume 78, November 2021, 101879.


Patrycja Klusak

Dr Patrycja Klusak

Affiliated Researcher

Dr Patrycja Klusak is an Associate Professor at Norwich Business School at University of East Anglia and an Affiliated Researcher at Bennett Institute for Public Policy at the University of...

Dr Moritz Kraemer

Dr Moritz Kraemer is an international economist and expert in credit analysis and economic policy. Moritz is Chief Economic Advisor of Acreditus, a UAE-based risk consultancy firm, and Independent Non-Executive...

Tri Hoang

Tri is a Ph.D. student at the University of Economics Ho Chi Minh City, Vietnam. He is also a lecturer at Vietnam’s Ho Chi Minh City University of Technology (HUTECH)....

Yen Tran

Yen is a PhD Candidate at the University of Aberdeen, Scotland. Her research interests are Credit Ratings, Corporate Finance and Narrative Economics. Yen holds an MSc degree in Finance from...

Dr Huong Vu

Dr Huong Vu is a Lecturer in Finance at University of Aberdeen. She joined the University of Aberdeen in September 2018. Prior to that, Dr Huong Vu had three years...

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