CountryRisk.io

Nepal's first sovereign rating: On November 21st, Fitch Ratings assigned Nepal a BB- rating with a stable outlook. This rating is less favorable when compared to CountryRisk.io's shadow rating of BBB*, as illustrated in the graph below. Alongside our sovereign risk scores and rating model, I tasked our AI economic and country risk assistant, along with its various agents, to create a brief summary of Fitch's sovereign rating and to compare it with our shadow ratings. The outcome is impressive for a start, and you can explore further and take a deeper dive for more insights. *As we often emphasize in these comparisons, our shadow ratings primarily rely on quantitative metrics and do not take into account qualitative factors or adjustments for specific nuances. Contact us to find out more: [email protected] Bernhard Obenhuber Patrick Kranzlmüller Axel Swoboda Tümer Tosik

Kyrgyz Republic's impending dollar bond issuance The Bloomberg report* on 1 November encouraged us to see how our sovereign shadow ratings, currently between B+ and BB-, fare in comparison to the only existing agency rating that's available. Moody's currently assigns the sovereign a B3 rating, and has revised its outlook to stable from negative in July 2024. One could a more comprehensive understanding of Kyrgyzstan's sovereign rating could be made through an in-depth analysis using CountryRisk.io sovereign rating model, which incorporates qualitative factors and indicators. We asked our AI economic and country risk assistant to write a short sovereign write-up for Kyrgyzstan, and the analysis reads well. * Thanks to Paul Della Guardia for liking Jorgelina do Rosario's post on this. Nariman Gizitdinov Bernhard Obenhuber Tümer Tosik Reach out to us to learn more how we integrate AI into our data analytics and country risk models, as well our sovereign risk model.

CountryRisk.io: Assessing country risk, simplified! And now even more simple with our AI assistant at work.

CountryRisk.io's AI assistant at work I continue to play around with our AI country risk and economic research assistant. To test it some more, I took inspiration on Robin Wigglesworth’s article yesterday, “Two decades of EM bond history” (Financial Times, 14 Oct). Among its many impressive functions, our genius AI assistant can be deployed to do preliminary research and analysis. It does go into details, so it's often more than just "preliminary". In my case, I asked the following questions, which I derived from the article’s summary. I would say our AI assistant did a splendid job in doing background research. And that’s what it aims to do: its goal is to be your sparring partner to make you more efficient. After all, research, big or small, can be time-consuming. 1. What have we learnt from two decades of performance in emerging markets? 2. In what macro/markets environment does emerging market fixed income flourish? 3. What role can emerging markets fixed income play in broader portfolios? 4. Do you need to hedge when investing in local emerging markets local debt? The findings and conclusions were largely aligned with Goldman Sachs’ paper. Having a digital twin comes in very handy. We're unrolling this feature soon, but if you want a sneak peek for your organization, reach out to us on [email protected] Bernhard Obenhuber Tümer Tosik Axel Swoboda Patrick Kranzlmüller

Are bond investors right to view France as riskier than Spain? The question, drawn from this week's article in The Economist article, "European bond markets: Trading places", prompted me to look at our own shadow ratings for all countries cited in the article. Below are CountryRisk.io's quantitative* assessments for France, Spain, Portugal, Italy and Greece. A couple of thoughts: 1. Our shadow ratings for all countries have historically been worse than those of the rating agencies, but all have converged with ours since the European debt crisis. 2. France is yet to catch up. Will it? Even if qualitative adjustments were applied, (actively traded currency and reserve currency), are they sufficient to keep the ratings so high? As an aside, I asked our AI economic and country risk assistant to do a short analysis for me on this topic. Happy to see that the summary I got back isn't too different from the article in The Economist. Reach out to us to get a preview of how much more intelligent our AI assistant has become, with new awesome features and tasks to be unveiled soon. * Our shadow ratings are based solely on quantitative factors and exclude qualitative indicators or adjustments. Bernhard Obenhuber Tümer Tosik Patrick Kranzlmüller Axel Swoboda

Hot off the press: International Narcotics Control Strategy Report (INCSR) Volume II The latest edition has just been released by the US State Department. This report is divided into two volumes: the first addresses issues related to drug production and trafficking, while the second provides comprehensive insights into global money laundering, particularly in relation to illicit narcotics as a predicate offense and a source of illicit funds. Key highlights are illustrated in the accompanying visual, and the complete report can be accessed at the following link:  https://lnkd.in/ecq_xyVy Visit CountryRisk.io to see our latest AML country risk scores. Join a growing number of global organisations who have created their own tailor-made AML country risk scores through us. Block a call here: https://lnkd.in/eFA5tyA6 #INCSR #AML #moneylaunderingjurisdictions

What will the future job profile of a macroeconomist or sovereign risk analyst entail? As generative AI and machine learning continue to advance and data becomes increasingly accessible, there is a pressing need for adaptation alongside significant opportunities for the roles of economists and sovereign analysts. At CountryRisk.io, we anticipate that the four primary competencies and responsibilities will include: 1.        Data sourcing: Professionals must extend beyond commonly available datasets and actively seek out and evaluate alternative and niche datasets to maintain a competitive advantage. They should also possess the capability to efficiently transform unstructured data into structured formats. 2.        Knowledge creation through quantitative modeling and the production of well-crafted, opinionated reports will be essential. The repetitive task of fact recycling can be delegated to AI. 3.        Knowledge management should occur within dedicated systems rather than on shared drives. This approach will unlock the potential inherent in individual or organizational digital twins. 4.        Communication, whether through group presentations or one-on-one interactions, has always been vital and will remain so in the future. The emotional connection with a trusted expert will continue to hold significance. However, we can expect substantial changes in engagement methods. Audiences will not only attend presentations and read reports but will also interact with our digital twins – the ultimate sparring partner – to pose questions, access curated dashboards, or utilize APIs. How do you envision the evolution of these roles? Is your department still operating as it did a decade ago? Perhaps the future is already upon us.

Some thoughts on CountryRisk.io's AML country risk scores: Our AML country risk scores - which covers 249 countries and territories - are updated monthly and following the crucial Financial Action Task Force (FATF) Plenary Sessions. For those not familiar, this decides on the changes to the black- and grey-lists of countries. Whilst our standard or off-the-shelf AML country risk scores are a good benchmark for some of our clients, many often choose to customise their AML risk scores for a number of reasons, chief among which is to allow them to reflect nuances in their respective company, industry, sector and location. Some also integrate their internal data. We take charge in the cumbersome and often elaborate data update process and more importantly, in writing their methodology for compliance documentation. After several years of running our standard AML country risk scores, we’re sharing some observations below: Plot 1: On average, 196 data points change per month. In some months, there are virtually no data changes whilst in others, up to 1,000 data points are updated across the different data sources. Plot 2: In each update, three countries/territories move from one risk category to a different one on average. (We use five risk categories: very low risk, low risk, medium risk, high risk, very high risk.) Plot 3: Over the last couple of years, CountryRisk.io’s AML Country Risk Scores have improved slightly. Clearly, though, there is still a very long way to go to reduce predicate offenses as well as strengthen the control environment. #moneylaundering #AML #predicateoffenses #fatf #compliance Bernhard Obenhuber

How we assess country risk Part 2: The search for relevant explanatory factors This blog post builds upon our previous post on various data sources and caveats for historical sovereign defaults. Bernhard Obenhuber explores macroeconomic indicators that are material in spotting future debt distress or are candidates for sovereign default. Notably, while macroeconomic indicators - most of which are long-term in nature - provide a good differentiation of sovereign risk, the strengths of some weaken among lower- or higher-rated segments. One such indicator is GDP per capita. This arises when the credit rating of a sovereign deteriorates quickly from a relatively solid level as in the case of Greece, and the rather structural and slowly moving indicators like GDP per capita do not move rapidly enough or in tandem. For more on his take, follow his analysis here: https://lnkd.in/ejx7_8RF A future post will expand the analysis by examining other relevant factors such as the global business and interest rate cycle or force majeure events like war, political coups or natural disasters.

Yesterday CountryRisk.io announced more of its AI-powered tools that help you increase your efficiency, enhance your team's shared knowledge-base library and allow you to interact with our sovereign risk scores. Whether it's our off-the shelf risk scores or those tailor-made for each company, our clients have been relying on us for accurate and timely country risk solutions. We continue to deliver results by harnessing the power of AI, and are excited to roll out our next innovation in the coming months that will revolutionise economic research and country risk assessment. We are eager to discuss your team's specific needs and explore how our country risk product suite and AI Country Risk Assistant can enhance your daily tasks. Please schedule a meeting with us here: https://lnkd.in/eDrVmQ4p