The logics of sovereign credit ratings in developed and developing countries

This article analyzes empirically the different determinants of Standard & Poor’s, Moody’s and Fitch ratings in developed and developing countries. It finds that the determinants of the ratings follow different patterns in both groups of countries. Whereas credit rating agencies regard openness to trade as negative for developed countries, they do not for developing countries. Whereas gross debt stock and the age structure of the society are significant predictors for credit ratings in developing countries, developed countries profit from a low unemployment rate, a long tenure of the chief executive and strong fiscal rules, more specifically from strong balanced-budget and expenditure rules.