How do you rate sovereign creditworthiness?

BRITAIN lost the top credit rating from Moody’s on February 22nd, but Standard & Poor’s and Fitch, the two other main ratings agencies, have yet to make the same move. As the table below shows, the firms often have different ratings for the same country; France still gets top marks from Fitch but not from the other two. The assessment of a country’s creditworthiness is an art, not a science; a government’s willingness to pay may be just as important as its ability to do so. It is not hard to see why Australia, with a debt-to-GDP ratio of 27.1% and a small current deficit, is rated triple-A by all three agencies. But Japan, with debt of 237% of GDP, and a huge current deficit is rated more highly than Turkey. It is partly down to a country’s history of meeting its obligations and partly down to the nature of its creditors; almost all of Japan’s government debt is owned by its own citizens.

The table below shows how the credit ratings of Moody's, Fitch and Standard & Poor’s correspond with each other.