This rating methodology explains ACRA’s approach to assigning credit ratings to sovereign issuers and their issues using an international rating scale. It includes key rating definitions, a description of the sovereign model structure and a basis for each of its analytical blocks, as well as macroeconomic variables that, in ACRA’s opinion, are the most informative in assessing sovereign credit risk. The weights within each block of the core part of the model as well as between each block indicate ACRA’s view on the importance of each block and the factors within them for the issuer’s creditworthiness.
ACRA’s approach is a combination of key quantitative indicators and a set of qualitative modifiers based on expert judgement on various sovereign policies and indicators signaling the efficacy of those policies. The qualitative modifiers adjust the results of the model and capture tendencies and trends not fully reflected by the quantitative indicators in the model.