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Basic Question 4 of 5
Which of the following statement is (are) true with respect to sovereign ratings assigned by S&P?
II. Assigning a debt rating for a sovereign issue is more subjective than assigning a debt rating for a corporate bond.
III. If the sovereign issuer is a member of the World Trade Organization, legal action may be taken against it if it violates its bond obligations.
IV. A low debt service-to-import ratio gives an indication that a sovereign nation has enough foreign currencies to meet its foreign debt obligations.
I. Foreign currency debt ratings are usually higher than local currency ratings for the same sovereign issuer.
II. Assigning a debt rating for a sovereign issue is more subjective than assigning a debt rating for a corporate bond.
III. If the sovereign issuer is a member of the World Trade Organization, legal action may be taken against it if it violates its bond obligations.
IV. A low debt service-to-import ratio gives an indication that a sovereign nation has enough foreign currencies to meet its foreign debt obligations.
User Contributed Comments 1
| User | Comment |
|---|---|
| ericczhang | Theoretically, imports can reflect the ability of a nation to command foreign currency to pay down foreign currency debts. This may be more useful for nations that are better at generating financial account surpluses/inflows than current account surpluses/inflows like the US and the UK. |
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Learning Outcome Statements
describe funding choices by sovereign and non-sovereign governments, quasi-government entities, and supranational agencies
CFA® 2025 Level I Curriculum, Volume 4, Module 5.