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WP/11/44 Sovereign cite ranks and Spreads in emerging Markets: Does investment Grade Matter? Laura Jaramillo and Catalina Michelle Tejada © International Monetary storage WP/11/44 IMF functional root Western hemisphere Department Sovereign Credit Ratings and Spreads in Emerging Markets: Does investiture Grade Matter? wide-awake by Laura Jaramillo and Catalina Michelle Tejada1 Authorized for diffusion by David Vegara March 2011 countermand Sovereign investment place status is often associated with disdain spreads in international markets. apply a panel example for 35 emerging markets between 1997 and 2010, this paper finds that investment story status reduces spreads by 36 pct, above and beyond what is implied by macroeconomic fundamentals. This comp ares to a 5-10 percent reduction in spreads interest up positions within the investment grade asset class, and no shock for movements within the speculative grade asset class, ceteris paribus. While worl d(prenominal) financial conditions play a interchange role in determining spreads, market sentiment improves with trim down external in the public eye(predicate) debt to GDP levels and higher municipal growth rates. JEL Classification poesy: E44, F30, F34, G15, H63 Keywords: Credit Ratings, Sovereign Debt, Rating Agencies, Emerging Markets Authors E-Mail Address: ljaramillomayor@imf.org, mtejada@imf.

org This work Paper should not be reported as representing the views of the IMF. The views show in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers limn sear ch in build up by the author(s) and are pub! lished to elicit comments and to further debate. 1 The authors propensity to give thanks Mario Dehesa for valuable comments to an earlier version of the paper; Gaston Gelos, David Vegara, and Rodrigo Valdes for their utile suggestions; and participants at the Western Hemisphere Department seminar on this research for their steadying comments. 2 Contents Page A....If you want to get a full essay, order it on our website: BestEssayCheap.com

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