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.
