Sovereign Credit Ratings and Private Capital Flows to Low-Income Countries

bibliographic database
Line

Periodical article

Title:	Sovereign Credit Ratings and Private Capital Flows to Low-Income Countries
Author:	Lehmann, Alexander
Year:	2004
Periodical:	African Development Review
Volume:	16
Issue:	2
Period:	September
Pages:	252-268
Language:	English
Geographic terms:	Subsaharan Africa Africa
Subjects:	capital movements foreign investments credit Economics and Trade Development and Technology
External link:	https://onlinelibrary.wiley.com/doi/10.1111/j.1017-6772.2004.00091.x/pdf
Abstract:	As low-income countries obtain sovereign credit ratings in increasing numbers, notably in sub-Sahara Africa, this article examines the potential effects on the composition and volume of private capital flows. Sovereign credit ratings are unlikely to overcome the informational asymmetries that impede private capital flows, and due to new international capital adequacy rules may actually raise the costs of capital for private borrowers. Nevertheless, they could help develop local and regional securities markets and assist mature private borrowers in hitherto unrated countries. Also, there may be beneficial disciplining effects on policymakers, and a growing differentiation between countries subject to an Africa-wide risk premium. Bibliogr., notes, ref., sum. in English and French. [Journal abstract]