Sovereign and Country Risk Public Course

Level: Intermediate

Duration: 2 Days

CPD points: 16

Overview Why Choose

The overall goal of this course is for participants to have a structured approach to Fitch Learning?
the analysis of sovereign and country risk in both mature and developing markets.
Instructors

Key Learning Outcomes Our instructors are experienced

professionals and will provide
you with easily digestible
• Understand the key drivers of country and sovereign risk in both mature and content, using knowledge
emerging markets learned from many years in the
• Identify qualitative, quantitative and market indicators of vulnerability industry.
• Recognize the impact of sovereign support and country risk on other exposures,
including public sector entities and banks Case studies
• Review the lessons learned from the 2008 financial crisis, previous crises in You will work through current,
various regions of the world, and the impact of the COVID-19 pandemic and region specific case studies
consequent global recession taken from real companies so
you can apply what you are being

Who Should Attend taught as soon as you get back

to the office.

This course is suitable for Investors in government bonds, public sector debt, Interactive
foreign companies, banks and foreign currencies, as well as international bankers
All of our courses are highly
and multinational companies investing and trading in foreign markets.
interactive with no more than 16
participants. The discursive style
of training helps you develop
confidence in your future
“Good discussion, case studies and decisions and analysis.

presentation of concepts with solid CPD recognized

We are a corporate member of
illustrations.” CPD and all our courses are CPD
recognized. Eight CPD points are
Lori-Ann Wynter, Apple Bank for Savings rewarded per course day.

CONTACT US:
Europe: Tel. +44 (0) 20 7496 8401 US: Tel. +1 888 203 1804 Asia: Tel. +65 6327 1581 Dubai: Tel. +971 800 72489
Email: [email protected] Web: fitchlearning.com
 Course Content
DAY ONE • Economic growth, inflation, income levels
• Monetary and fiscal policies
Analytic Overview • Foreign exchange regime risk profiles
The aim of this section is to distinguish between sovereign • Exercise: Assessing the relative risks and benefits of
and country risk and understand how the rating agencies dollarization pegged or floating foreign exchange regimes
and other analysts assess these risks, review the causes and • Market rates and purchasing power parity
effects of past and recent sovereign crises and use market • Key performance indicators: Benchmarks in mature and
prices to indicate credit perception, and apply a structured emerging economies
approach to understand sovereign debt issuance and • Exercise: Reviewing the macro-economic strengths,
payback. weaknesses and policy options for a highly rated,
Historical Context intermediate and lower rated sovereign
• History of sovereign defaults and crises
Public Finances
• Case study: Analyzing the differing causes of two major
sovereign defaults • Fiscal policy and budgetary flexibility; primary budget
• Current and previous economic crises: causes, effects and balance, public sector balance
differing impact on mature and emerging markets • Exercise: Assessing the financing flexibility of various
• Sovereign issuer analysis vs. country risk encompassing sovereigns
private sector • Sustainable debt and debt service burdens under a global
• Role of IMF and other multilateral bodies, historically and pandemic
new loans made to L.I.C.s due to Coronavirus pandemic • Contingent risks: Pension and health care, infrastructure
Perspectives on Analysis • Exercise: Reviewing the public finance strengths,
weaknesses and policy options for a highly rated,
• Rating agency sovereign methodology, capacity and intermediate and lower rated sovereign
willingness to service debt, foreign and local currency
ratings
• Transfer and convertibility risk: FX and local currency
ratings, country ceilings
• Market indicators: CDS, bond and equity indicators
DAY TWO
• Exercise: Determining implied ratings from bond prices External Finances
• Structured approach to analysis: purpose, payback, risks
and structure • Balance of payments: Trade and current account
• Exercise: Review of varying sovereign and country risk • Export and import composition and trends
exposures • Case Study: Identifying early warning external debt
problems of a vulnerable sovereign
Risk Analysis • Reliance on volatile receipts e.g. commodities or
The aim of this section is to use a structured approach remittances
to assess sovereign risk incorporating macroeconomics, • External financing needs: Exposure to volatile capital flows
sovereign debt exposure, political and financial sector factors. (portfolio capital and short term debt)
Macro-economic policies and performance

Copyright Notice: The copyright and all other intellectual property rights in these materials are, and shall continue to be, owned by Fitch Learning or its affiliates or licensors, as applicable, whether adapted, written for
or customised for the recipient. These materials may not be reproduced or used, in whole or in part, for any purpose other than the training provided and may not be furnished to any persons or companies other than
those to whom copies have been made available by Fitch Learning. This notice shall apply in respect of all materials provided by Fitch Learning in relation to any training provided by Fitch Learning. This notice may
not be removed from these materials or any other such materials.

CONTACT US:
Europe: Tel. +44 (0) 20 7496 8401 US: Tel. +1 888 203 1804 Asia: Tel. +65 6327 1581 Dubai: Tel. +971 800 72489
Email: [email protected] Web: fitchlearning.com
 Course Content
• Net external debt burden relative to GDP and current from stand alone: dependent and non-dependent CLEs
account receipts • Types of support: Statutory guarantee, specific guarantee,
• Central bank reserves and liquidity ratio written commitment, absence of a written commitment
• Exercise: Reviewing the external finances - strengths, • Criteria for analysis: Legal status, integration, strategic
weaknesses and policy options for a highly rated, importance, control, ability to support
intermediate and lower rated sovereign • Case Study: Assessing the risks in having exposure to a
• Exercise: Identifying strong and weak performers across major public- sector entity in an economically challenged
four regions from key economic data country
Structural, Political and Governance Risks Structure
• Savings and investment, capital flows The aim of this section is to review the losses that have
• Business environment, trade and economic diversity and occurred in sovereign crises and how they have been and can
stability be mitigated by appropriate structures and risk management
techniques.
• Political risk: Regime effectiveness and legitimacy, income
disparity, conflict risk • Default and restructuring events, distressed debt
• International trade and political links exchanges
• Governance: Legal system, property rights, judicial process • Private claims vs. official and multilateral creditors e.g.
and corruption Paris Club, IMF, Chinese loans to Frontier Markets
• Exercise: Assessing the impact of political factors on • Export credit agency buyer and supplier credit
the overall economic and credit assessment of different • Transfer risk and country risk insurance
countries • Setting country limits
• Case Study: Applying the framework and tools of country
Financial Sector
risk analysis to various types of country/sovereign
The aim of this section is to identify how economic factors exposure
and regulation can affect the financial sector and how a weak
financial sector can negatively affect a sovereign.
• Macro-prudential and bank systemic risk indicators
• Size and strength of banking system
• Financial sector and overall intermediation levels, debt and
equity capital markets
• Regulatory responses to banking crises
• Exercise: Reviewing the policy options for a failing
banking system and systemic risk
Credit Linked Entities (CLE)
• Types of CLE: Government agencies; autonomous public
bodies, state owned companies, not for profit companies
fulfilling social missions
• Rating criteria and notching down from sovereign or up

Copyright Notice: The copyright and all other intellectual property rights in these materials are, and shall continue to be, owned by Fitch Learning or its affiliates or licensors, as applicable, whether adapted, written for
or customised for the recipient. These materials may not be reproduced or used, in whole or in part, for any purpose other than the training provided and may not be furnished to any persons or companies other than
those to whom copies have been made available by Fitch Learning. This notice shall apply in respect of all materials provided by Fitch Learning in relation to any training provided by Fitch Learning. This notice may
not be removed from these materials or any other such materials.

CONTACT US:
Europe: Tel. +44 (0) 20 7496 8401 US: Tel. +1 888 203 1804 Asia: Tel. +65 6327 1581 Dubai: Tel. +971 800 72489
Email: [email protected] Web: fitchlearning.com
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Terms and Conditions Summary

Cancellations and transfers can be made free of charge with 30+ days written notice. Notification must be made in writing and receipt must
be acknowledged by Fitch Learning. Participants who do not attend or give less than 30 days’ notice of cancellation are liable for the full
course fee and no refunds can be given. A substitute can be sent at no additional charge but we will require notice 2 working days before
the course. Should a participant wish to attend the next course date, providing the course fee has been paid in full, we will only invoice for
25% of that course fee. Only one transfer can be made in respect of any booking.

Invoice and Payment:

Invoice will be sent, via email, to the billing contact within 3 working days of receiving the completed registration form. We require payment
within 30 days or before course attendance, whichever is sooner. To discuss payment with a member of the Accounts team please call + 44
(0)845 072 7620.

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CONTACT US:
Europe: Tel. +44 (0) 20 7496 8401 US: Tel. +1 888 203 1804 Asia: Tel. +65 6327 1581 Dubai: Tel. +971 800 72489
Email: [email protected] Web: fitchlearning.com