Vision Finance Sovereign Ratings

Vision Finance is pleased to present Proprietary Vision Finance Sovereign Ratings model. Vision Finance has dedicated team focused on Sovereign, an area of strategic focus for an institution that is predominantly visibly focused on Emerging Markets. 

Development of Proprietary Vision Finance Sovereign Ratings Model 

Our Proprietary Model is done using our extensive experience in Emerging Markets. Traditional models do not take into account inflation risk, and they should, as even though there is no default, it does not mean that there is no loss.  Vision Finance expects this model to gain further credibility going forward, as the inflation expectation for the Western World increase.  At the moment we apply universally expected inflation information as provided by IMF. The formula used for implied cds takes into account many factors, including

We use an exhaustive collection of countries from all across the world used for the Unique Vision Finance Formula development. It is a groundbreaking work on the global perspective

Vision Finance Philosophy To Ratings

Our ratings are solely for the use by investors.  Vision Finance assumes that any investment with below 50% chance of return is simply a C and we should not assign it a rating, as there are many other factors that come into play, including recovery values, dummy variables, recovery opportunity, etc.  Our model will hence be misleading for such extreme cases.  It is also possible that inflation measures are one off and temporary.   We also assume that from the viewpoint of investor the optimal level of inflation is 0%, though we recognise that it is likely to be at least 2%, implying that from the sovereign perspective assuming a perfect management of the economy the maximum obtainable rating will be that of AA.  Anything above that might in fact be suboptimal in the long run to the borrower, even if it is optimal in the medium term to the lender.

Big Picture

Sovereigns cannot go bankrupt, they can only default and reschedule. This has implications, as even if there is a moratorium on payments, one can expect a good recovery rate from their debt on the forward basis in some cases. We do not take into account GDP per person, in fact we are of believe that low income countries in the long term benefit from the concept of catch up, though this is not included in our statistic

Strengths of Our Model

Some Limitations of Our Model

Boundaries for Sovereign Ratings


AAA: the best quality borrowers, reliable and stable . Includes: AAA, AAA-

AA: quality borrowers, a bit higher risk than AAA. Includes: AA+,  AA, AA-

A: quality borrowers whose financial stability could be affected by certain economic situations. Includes A+, A, A-

BBB: medium class borrowers, which are satisfactory at the moment. Includes: BBB+, BBB, BBB-

BB: more prone to changes in the economy. Includes: BB+, BB, BB- 

C: currently vulnerable and dependent on favourable economic conditions to meet its commitments.  Can also turn highly vulnerable, resulting perhaps in bankruptcy or in arrears but still continuing to pay out on obligations. 


1 AAA 97.06 100

2 AAA- 94.12 97.05

3 AA+ 91.18 94.11

4 AA 88.24 91.17

5 AA- 85.29 88.23

6 A+ 82.35 85.28

7 A 79.41 82.34

8 A- 76.47 79.40

9 BBB+ 73.53 76.46

10 BBB 70.59 73.52

11 BBB- 67.65 70.58

12 BB+ 64.71 67.64

13 BB 61.76 64.70

14 BB- 58.82 61.75

15 B+ 55.88 58.81

16 B 52.94 55.87

17 B- 50.00 52.93

18 C 0.00         49.99

For more information about this model please contact Vision Finance Sovereign Team, led by Sujay Prasad,


There was no AAA rating (why should there be?).   

 -  UAE, Bahrain, Brunei, Kuwait  AA+

  - China, Quatar                         AA-

  - Mexico, Saudi Arabia               A+

  - South Africa, Brazil                   A

  - Russia, Poland, Kazakhstan      A-

  - German, Spain, Japan            BBB

  - UK, USA, Belgium, Italy         BBB -

  - Portugal, Argentina, Sweden    BB+

  - Switzerland, Kenya                 BB

  - Ireland, Venezuela                   B

  - Greece                                   B-

  - Liberia, Sierra L, Zimbabwe       C

For full results and our Local Currency Debt analysis please consult our presentation below.

Welcome to the world of Vision Finance.  Finance as it should be.