EthiFinance updates it Sovereign Long-Term Rating Methodology

We have published on our website a new version of our Long-Term Sovereign Rating Methodology introducing material changes to the analytical framework, entering into effect today, 31st of May.

EthiFinance assigns sovereign ratings using a three-step process that blends qualitative and quantitative factors to ensure precise credit ratings:

  • Model-Driven Anchor Rating: This initial rating is based on a PLS-VIP model using 38 key performance indicators across macroeconomic performance, public finances, and ESG factors.
  • Qualitative Adjustments: These adjustments refine the anchor rating by considering additional risk factors, future trends, and qualitative aspects.
  • Modifiers: Lastly, modifiers are applied for extraordinary events or unique features like reserve currency status.

As a novelty, we have included ESG considerations in our Criteria, both in the model-driven and qualitative adjustments parts, in addition to a specific ESG cap.

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