Undercover the dos and don’ts for your internal rating tool and consider the rating agencies’ modus operandi.
Training objectives:

Analyse sovereign debt issuance in today’s capital markets
Interpret macroeconomic and other quantitative data which impact sovereign credit ratings
Integrate qualitative risk factors into the risk assessment
Differentiate the rating methodologies for supranational agencies from those of sovereign obligors
Appreciate how the rating agencies assess risks
Discuss the UN principles on distressed sovereign debt recovery and legal process
Define situations of default with respect to international (external) sovereign debt and domestic sovereign debt
State how investors can predict improvements and deteriorations in sovereign credit quality


Introduction: The seminar identifies relevant approaches of credit analysis that are useful to incorporate in a financial institution’s own internal rating tool. Further, this enables participants to deepen their expertise about credit risk for global banks and sovereign obligors. Covering Standard & Poor’s, Fitch and Moody’s methodologies helps participants identifying general trends on each of the entities’ rating factors and qualitative adjustments. Through detailed case studies participants will be able to analyse how rating agencies apply their own criteria, and especially which questions remain unanswered in public rating reports. Further, participants will develop skills to read between the lines in rating reports in order to fully being able to form their own informed opinions about credit risk of sovereigns and financial institutions of their interest. Know-how about the rating agencies’ modus operandi will be transformed into practical tips about how internal ratings tools should assess credit risk and which factors need to be taken into account to what extent, when analysing banks and sovereigns. The seminar further discusses also the availability of validated data, so that participants instantly know where to find the right underling information for each of the rating factors, taking into account qualitative as well as quantitative data. Overall this seminar leads participants to keep track of probability of default and helps to conceive an informed opinion about counterparties’ creditworthiness. This again, helps improve a financial institution’s own internal rating tool, make it more robust and exceptionally forward-looking. Starting position: International rating agencies assess sovereign credit risk according to their own methodologies and criteria. Consequently, even taking into account the same set of hard fact data, rating outcomes may vary significantly from one rating agency to another. The large number of rating factors, and the complex interrelationships between various entities’ ratings, taking into account different sectors such as financial institutions and local governments, make it very difficult to track rating decisions and almost impossible to predict them. Implementation: The two-day seminar deals on one hand with the individual rating factors and thus the basic sovereign rating criteria, on the other hand practical examples in form of detailed case studies for rated sovereigns will lead participants to in-depth knowledge of the rating agencies’ world of credit risk. In addition, the seminar discusses a selection of current ratings, in order to compare them qualitatively and quantitatively. Furthermore, the seminar covers current events and evaluates how they might impact specific sovereigns’ credit risk and how one can incorporate useful rating factors in each own’s internal rating tool. Added value: The aim of the seminar is giving participants a thorough analytical perception of sovereign credit risk and discussing how they interrelate with ratings of other sectors (e.g. banking system, local governments, etc). The detailed work on case studies allows participants to break down far-reaching events for sovereigns to a single credit rating and use the knowledge for each individual own purpose. By guiding the participants through the various sovereign rating methodologies, the seminar explains how rating agencies work in detail and how they derive their rating decisions. This facilitates the participants to anticipate rating changes and initiate appropriate measures on a timely basis.

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