Are sovereign credit ratings overrated?
Davor Kunovac () and
Rafael Ravnik ()
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Davor Kunovac: Croatian National Bank, Croatia
No 47, Working Papers from The Croatian National Bank, Croatia
Abstract:
In this paper we examine the relevance of changes in sovereign credit rating for the borrowing cost of EU countries. Our results indicate that discretionary credit rating announcements are only of limited economic importance for the borrowing cost of these countries. It seems that rating agencies do not reveal important new information to financial markets, in addition to that already contained in the underlying fundamentals. Hence, given the sentiment in financial markets, the borrowing cost of a country can only be reduced by improving macroeconomic and fiscal fundamentals.
Keywords: Sovereign credit ratings; borrowing cost; macroeconomic and fiscal fundamentals (search for similar items in EconPapers)
JEL-codes: E62 G14 G24 H63 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2017-02
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (3)
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Journal Article: Are Sovereign Credit Ratings Overrated? (2017) 
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Persistent link: https://EconPapers.repec.org/RePEc:hnb:wpaper:47
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