| As an example, Kuwait has enough reserves and sovereign wealth fund assets to finance 13.4 years of imports, while Bahrain could only finance over a year. The evolution of oil prices and the capability of institutions to diversify income sources will be the main factors that ratings agencies will take into account in their grading decisions.
A cross-sectional comparison across 37 countries shows that credit ratings explain about 37.5% of 10-year sovereign bonds yield. On average, the sovereign bond yield of any country is 0.4 percentage points higher than the one of a country with an immediately superior credit score. The intuition behind it is that a downgrade will increase the yield in the bond...............................................Full Article: Source
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