Sovereign and Subsovereign Analysis
| Course Provider |  |
| Dates Duration | TBC 2 Days |
| Venue | TBC |
| Course Fees | Full Fee: €2200 Network Members Fee: €1100 |
A two-day case study based workshop for those without a formal economics background. The intensive workshop will offer a structured approach to the analysis of country and sovereign risk in both emerging and mature markets and will review lessons learned from both the current and previous crises.
Course Objectives
Specifically, the workshop will equip participants to:
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Understand the key drivers of country and sovereign risk in both mature and emerging markets
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Identify qualitative, quantitative and market indicators of vulnerability
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Recognise the impact of sovereign support and country risk on other exposures, including public sector entities
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Review the lessons learned from the current and previous crisis in various regions of the world.
Target Audience
Analysts, fixed income, banking, insurance and other professionals with exposure to sovereign and country risk but lacking a formal economics background.
Content
ANALYTIC OVERVIEW
Historical context
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History of sovereign default and crisis
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Current and previous economic crises: causes, effects and differing impact on mature and emerging markets
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Sovereign issuer analysis vs. country risk encompassing private sector
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Role of IMF and other multilateral bodies.
Perspectives on analysis
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Rating agency sovereign methodology, capacity and willingness to service debt, foreign and local currency ratings
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Transfer and convertibility risk: FX and local currency ratings, country ceilings
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Market indicators: CDS, bond and equity indicators
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Structured approach to analysis: purpose, payback, risks and structure.
RISK ANALYSIS
Macro-economic policies and performance
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Economic growth, inflation, income levels
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Monetary and fiscal policies
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Foreign exchange regime risk profiles
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Market rates and purchasing power parity
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Key performance indicators: benchmarks in mature and emerging economies
Public finances
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Fiscal policy and budgetary flexibility; primary budget balance; public sector
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Sustainable debt and debt service burdens
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Contingent risks: pension and health care, infrastructure
External finances
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Balance of payments: trade, current a/c
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Export and import composition and trends
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Reliance on volatile receipts e.g. commodities or remittances
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External financing needs: exposure to volatile capital flows (portfolio capital and short term debt)
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Net external debt burden relative to GDP and current account receipts
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Central bank reserves and liquidity ratio
Structural, political and governance risks
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Savings and investment, capital flows
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Business environment, trade and economic diversity and stability
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Political risk: regime effectiveness and legitimacy, income disparity, conflict risk
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International trade and political links
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Governance: legal system, property rights, judicial process and corruption
Financial sector
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Macro-prudential and financial strength indicators
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Size and strength of banking system
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Financial sector and overall intermediation levels, debt and equity capital markets
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Regulatory responses to banking crisis
Public sector entities (PSE)
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Types of PSE: Government agencies; autonomous public bodies, state owned companies, not for profit companies
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fulfilling social missions
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Rating criteria and notching down from sovereign or up from stand alone: dependent and non dependent PSE’s
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Types of support: statutory guarantee, specific guarantee, written commitment, no written commitment
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Criteria for analysis: legal status, integration, strategic importance, control, ability to support
STRUCTURE
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Default and restructuring events, distressed debt exchanges
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Private claims vs. official and multilateral creditors e.g. Paris club, IMF
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Export credit agency buyer and supplier credit
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Transfer risk and country risk insurance
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Setting country limits
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