BLACKROCK INVESTMENT INSTITUTE

BlackRock Sovereign Risk Index, Q4 2017

19-Sep-2017
By BlackRock

Drawing on a pool of more than 30 measures spanning financial data, surveys and political insights, the BlackRock Sovereign Risk Index (BSRI) aims to provides investors with a framework for tracking sovereign credit risk in 60 countries.

Click here to view the latest BlackRock Sovereign Risk Index scores and rankings, and compare countries head-to-head.

How it works

The BSRI breaks down the data into four main categories that each count toward a country’s final BSRI score and ranking: Fiscal Space (40%), Willingness to Pay (30%), External Finance Position (20%) and Financial Sector Health (10%).

  • Fiscal Space – This category assesses whether the fiscal dynamics of a particular country are on a sustainable path. It estimates how close a country is to breaking through a level of debt that will cause it to default (i.e. the concept of proximity to distress), and how large an adjustment is necessary in order to achieve an appropriate debt/GDP level in the future (i.e. the concept of distance from stability).
  • External Finance Position – The factors in this category measure how leveraged a country might be to macroeconomic trade and policy shocks outside of its control.
  • Financial Sector Health – This category considers the degree to which the financial sector of a country poses a threat to its creditworthiness, were the sector were to be nationalised, and estimates the likelihood that the financial sector may require nationalisation.
  • Willingness to Pay – In this category we group factors which gauge if a country displays qualitative cultural and institutional traits that suggest both ability and willingness to pay off real debts.

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