Sovereign Risk

This course will examine the multifaceted nature of sovereign risk, with a focus on its recent history and contemporary issues.  The surge in sovereign debt caused by the Covid-19 pandemic has pushed the global debt burden to historical levels, surpassing the WWII debt peak.  The course will focus on the interplay of economic, institutional, fiscal, financial, market, political and geopolitical factors that influence sovereign credit quality.  It will primarily rely on country examples to analyze pivotal periods when sovereign risk spiked—namely, starting with the 1980s Latin American debt crisis, and continuing with the 1990s Nordic and Japanese financial crises, 1997 Asian financial crisis, the 2009 Greek crisis, recent cases of sovereign default and the effect of the Covid-19 shock on high and lower-middle income countries. The course will examine sovereign risk through the prism of credit rating agency methodologies (namely, Moody’s).  The course will take a look at how Environmental, Social and corporate Governance (ESG) concerns fit into sovereign credit risk assessment.