Subnational Credit Ratings : A Comparative Review

This paper surveys methodological issues in subnational credit ratings and highlights key challenges for developing countries. Subnational borrowing from capital markets has been on the rise owing to fiscal decentralization and demand for infrastructure investments. A prerequisite for accessing capital markets, subnational credit ratings have also emerged as a part of broader reform for fiscal sustainability. They facilitate a more transparent budgetary and financial management system. The global financial crisis makes subnational credit ratings more relevant, as they contribute to fiscal risk evaluations and fiscal adjustment. In addition to subnationals own credit strength, the creditworthiness of the sovereign and the intergovernmental fiscal system are among the most critical rating criteria. Implicit and contingent liabilities are integral to the rating process. Indirect debt instruments including off-balance-sheet financing create fiscal risks. The ongoing financial crisis has reinforced the rating focus on the management of liquidity, debt structure, and off-balance-sheet liabilities.

Bibliographic Details

Main Authors:	Liu, Lili, Tan, Kim Song
Language:	English
Published:	2009-08-01
Subjects:	ACCESS TO CAPITAL, ACCOUNTING, ACCOUNTING STANDARDS, ARREARS, BAILOUTS, BALANCE DUE, BALANCE SHEET, BANK FINANCING, BANK LENDING, BANK LOANS, BASIS POINTS, BENEFICIARIES, BID, BOND, BOND INDEX, BOND PRICES, BOND SPREADS, BOND YIELD, BOND YIELDS, BONDS, BORROWER, BORROWING CAPACITY, BORROWING COST, BORROWING COSTS, BUDGET DEFICIT, BUDGET DEFICITS, BUDGET SURPLUSES, BUDGETING, BUSINESS CYCLES, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL INVESTMENT, CAPITAL INVESTMENTS, CAPITAL MARKET, CAPITAL MARKET DEVELOPMENT, CAPITAL MARKET FINANCING, CAPITAL MARKETS, CAPITAL OUTFLOWS, CASH BALANCE, CASH FLOW, CASH INFLOWS, COLLATERALS, COMMERCIAL BANKS, CONTINGENT LIABILITIES, CORPORATE BONDS, CORPORATE DEBT, CORPORATE DEFAULT, CORPORATE GOVERNANCE, COUNTRY CREDIT, COUPONS, CREDIBILITY, CREDIT ASSESSMENT, CREDIT MARKETS, CREDIT QUALITY, CREDIT RATING, CREDIT RATING AGENCIES, CREDIT RATING AGENCY, CREDIT RATINGS, CREDIT RISKS, CREDIT SPREADS, CREDIT STANDING, CREDIT STRENGTH, CREDIT STRENGTHS, CREDITORS, CREDITWORTHINESS, CURRENCY CRISES, CURRENCY DEVALUATION, CURRENCY RISKS, DEBT, DEBT BURDEN, DEBT CRISIS, DEBT FINANCING, DEBT INSTRUMENT, DEBT INSTRUMENTS, DEBT ISSUANCE, DEBT ISSUER, DEBT ISSUERS, DEBT ISSUES, DEBT MANAGEMENT, DEBT MARKET, DEBT OBLIGATIONS, DEBT RATIOS, DEBT REDUCTION, DEBT SERVICE, DEBT SERVICING, DEBT STOCK, DEBT STOCK OUTSTANDING, DEBT-SERVICE, DEBTS, DEFAULT PROBABILITIES, DEFAULT RATES, DEFAULT RISK, DEFAULT RISKS, DEFAULTS, DERIVATIVE INSTRUMENTS, DEVELOPING COUNTRIES, DOLLAR BOND, DOMESTIC CURRENCY, DOMESTIC DEBT, DOMESTIC MARKET, ECONOMIC DEVELOPMENT, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET BOND, EMERGING MARKET ECONOMIES, EMERGING MARKETS, ENFORCEABILITY, ENFORCEABLE CONTRACTS, EXCHANGE CONTROLS, EXPENDITURE, EXPENDITURES, FINANCES, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL HEALTH, FINANCIAL INFORMATION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MANAGEMENT, FINANCIAL MARKETS, FINANCIAL PERFORMANCE, FINANCIAL RISKS, FINANCIAL SUPPORT, FINANCIAL SYSTEM, FISCAL CAPACITY, FISCAL DECENTRALIZATION, FISCAL DISCIPLINE, FISCAL POLICIES, FISCAL POLICY, FOREIGN CAPITAL, FOREIGN CURRENCY, FOREIGN CURRENCY DEBT, FOREIGN CURRENCY RISK, FOREIGN DEBTS, FOREIGN MARKETS, GLOBAL ECONOMY, GOVERNANCE STANDARDS, IMPLICIT GUARANTEES, INCOME GROWTH, INCOME TAXES, INFLATION, INFRASTRUCTURE FINANCING, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURE INVESTMENTS, INSTITUTIONAL INVESTORS, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATE RISK, INTERNATIONAL BANK, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKET, INTERNATIONAL CAPITAL MARKETS, INTERNATIONAL RATING AGENCIES, INVESTMENT BANKS, INVESTMENT POLICIES, LEGAL CONSTRAINTS, LEGAL FRAMEWORK, LENDERS, LIQUIDITY, LIQUIDITY MANAGEMENT, LIQUIDITY POSITION, LIQUIDITY PROBLEMS, LOCAL CURRENCY, LOCAL ECONOMY, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, LONG-TERM DEBT, MACROECONOMIC MANAGEMENT, MARKET PARTICIPANTS, MARKET PRICING, MARKET RISKS, MARKET VALUE, MATURITIES, MATURITY, MATURITY STRUCTURE, MORAL HAZARD, MORTGAGE, MORTGAGE-BACKED SECURITIES, MUNICIPAL INVESTMENT, PAYMENT OBLIGATIONS, PENSION, PENSIONS, PORTFOLIO, PRICE RISKS, PROBABILITY OF DEFAULT, PUBLIC FINANCE, PUBLIC INVESTMENT, PUBLIC SECTOR DEBT, REGULATORY FRAMEWORK, REGULATORY FRAMEWORKS, REPAYMENT, REPAYMENT CAPACITY, RESERVES, RETURNS, RISK ASSESSMENTS, RISK MANAGEMENT, RISK MANAGEMENT SYSTEM, RISK OF DEFAULT, SECONDARY MARKET, SHORT-TERM DEBT, SOFT BUDGET CONSTRAINT, SOLVENCY, SOVEREIGN BOND, SOVEREIGN BONDS, SOVEREIGN DEBT, SOVEREIGN DEFAULT, SOVEREIGN DEFAULTS, SOVEREIGN ISSUERS, SOVEREIGN RATING, SOVEREIGN RATINGS, SOVEREIGN RISK, SOVEREIGN RISKS, STAMP DUTIES, SUBNATIONAL BOND MARKET, TAX, TAX SYSTEM, TRADING, TRANSFER RISK, TRANSPARENCY, TREASURIES, USE OF DERIVATIVE, VARIABLE INTEREST RATE, YIELD SPREADS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090805152909 https://hdl.handle.net/10986/4206
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