Sovereign Debt with Jill Dauchy Episode 33: Elena Duggar on understanding Moody’s sovereign credit ratings process
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Feb 18, 2025 Elena Duggar, Managing Director and Chief Credit Officer for the Americas at Moody’s Investor Services, dives deep into the intricate world of sovereign credit ratings. She discusses the challenges and methodologies behind credit ratings, emphasizing their impact on investment decisions. Elena also highlights the relationship between climate finance and debt for nature swaps, while addressing the role of transparency in evaluations. Additionally, she unpacks the nuances of political risks and innovative financial solutions shaping the future of credit ratings.
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Role of Credit Rating Agencies
- Credit rating agencies assess credit risk, the risk of an entity failing to meet financial obligations.
- This applies to all entities, including governments, companies, and banks.
Differences Between Agencies
- Each credit rating agency uses its own methodologies to assess credit risk, leading to different analytical approaches.
- Moody's considers both the probability of default and the loss given default, differing from other agencies.
Growth of Moody's Coverage
- Moody's significantly expanded its sovereign rating coverage from 13 in 1985 to 143 currently.
- This growth reflects increasing access to global financial markets, especially by emerging and frontier markets.