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BlackRock Faults Homogeneous Sovereign Debt Ratings

Money manager uses its own analysis to assess country risk.

By Sebastian Boyd and Ye Xie, Bloomberg | Updated on December 21, 2012

Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock Inc., the world’s biggest money manager.

While 23 countries share the BBB+ to BBB- levels assessed by Standard & Poor’s, the lowest investment grades, up from 15 in 2008 at the beginning of the financial crisis, their debt to gross domestic product ratios range from 12 percent for Kazakhstan to 44 percent for Thailand and 126 percent for Italy, International Monetary Fund estimates show. The cost of insuring against a default by Italy, ranked BBB+, over the next five years is almost triple that for Thailand, which has the same rating.

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