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Country Risk Overview: Rankings, Ratings, and Analysis

Get comprehensive country risk ratings, rankings, and analysis for 152 countries. Evaluate the economic, financial, and political outlook to assess the risk of payment default by corporates. Identify sectors with high-risk potential and stay informed about payment incidents in various countries.

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Country Risk Overview: Rankings, Ratings, and Analysis

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  1. Country Risk Overview Yves Zlotowski Country Risk Department,Coface Paris

  2. Country risk @rating •  Country risk @rating assesses the average risk of payment default by corporates in a given country •  It indicates to what extent the companies’ financial commitments are affected by the overall economic, financial and political outlook for the country in which they operate

  3. Country risk @rating • The model calculates a score for each country which combines 7 types of risk : • Growth vulnerability • Sovereign financial vulnerability • External over indebtedness • Foreign currency liquidity crisis • Banking sector’s fragilities • Geopolitical and Governance vulnerabilities • Companies’ payment behaviour

  4. Country risk @rating • There are seven different rating grades:  A1 to A4 : The country's political and economic environment makes the probability of payment defaults quite low. The situation of the companies depends more on their sector of activity  B, C, D : The economic and political environment faces ongoing uncertainties and is likely to affect payments. The ratings are regularly updated 152 countries Ratings, indicators of payment incidents and country risk assessment are available on: www.cofacerating.com

  5. United States : So far, strong payment records …. Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  6. United States : … but some sectors should be watched closely Highest Risk Automotive Air Transport Textiles, Clothing Energy transport and distribution Household electrical appliances Paper Chemicals Steel Mass distribution Information technology, telecommunications Construction, mechanical engineering Pharmaceuticals Defence, aeronautics Ore, hydrocarbons + - Lowest risk • Scale of sector risk

  7. Western Europe : ….convergence in growth rates but still heterogeneous situations

  8. Germany : An upgrade in A1 in 2006 Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  9. Germany : Companies solvency is consolidated by reorganisations and productivity gains Highest Risk Construction Mass distribution Plastic and metal processing Paper Information technology, telecommunications Automotive Chemicals Steel Air transport Agro food Mechanicals Electrical and textile machinery Pharmaceuticals Optics, measurements and precision + - Lowest risk • Scale of sector risk

  10. Italy : back to normal Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  11. United Kingdom : strong payment record, traditional industries still weak Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  12. France: growth peeking up, payment experience remains favourable Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  13. Spain : High growth…but is it sustainable ? Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  14. Central Europe : a faster growth than in the Euro zone… Economic growth and payment incident index Western Europe (EU 15) Central Europe Payment incident index 100 : World 1995-2000 basis

  15. Central Europe :… but payments are more volatile Payment incident index Payment incident index 100 : World 1995-2000 basis

  16. Central Europe, Turkey : Exchange rates still shaky Low risk Manageable Significant High risk Companies’ payment behaviour Growth vulnerability Sovereign financial vulnerability External over-indebtedness Foreign currency liquidity crisis Banking sector’s fragilities Geopolitical and Governance vulnerabilities Central Europe Turkey

  17. Turkey : despite external shocks, good payment experience Payment incident index Payment incident index 100 : World 1995-2000 basis

  18. Russia : despite solid financial situation, governance still problematic

  19. Russia : improvement in payment behaviour but companies lack transparency

  20. US and Europe : country risk @rating

  21. Europe - CIS : country risk @rating

  22. Japan : confirmation of a stronger activity Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  23. Japan : Restructuring begins to bear fruit Highest risk + Building, Public works Food and Lodging Electronics Household electrical appliances Pharmaceuticals Steel, glass, paper Chemicals Textiles Mechanical engineering Air transport Automotive Telecommunications Information technology - Lowest risk • Scale of sector risk

  24. China : impressive but dangerous growth ?

  25. China: problematic banking system, strong external position

  26. Chinese corporate margins are under pressure Survey first results Coface China 2005 Reasons for non-payment 100% 90% 80% 68% 62% 70% 60% 50% 39% Private companies are the riskiest 37% 40% 27% 22% 20% 30% 17% 20% 5% 5% 10% 0% 100% Financialdifficulties Managementchaos Commercialdisputes Fraud & lackof morality Others 90% 77% 80% 68% 2004 2005 70% 60% 50% 40% 26% Strong pressure on margins result in financial difficulties 30% 19% 20% 6% 4% 10% 0% SOE's Private Companies Others 100% 90% 80% 2004 2005 70% 60% 49% 50% 36% 40% 30% 20% 9% 9% 10% 0% Fiercecompetition Lack of financingresources Impact of risingraw material prices Others

  27. India : the payment experience has improved Payment incident index Payment incident index 100 : World 1995-2000 basis

  28. China – India : the two countries are rated A3, are they similar risks ?

  29. Asia : payments are stable and robust Economic growth and payment incident index Payment incident index 100 : World 1995-2000 basis

  30. Asia : payments are stable and robust

  31. Asia : country risk @rating

  32. Asia : country risk @rating

  33. HIGHEST RISK 350 CIS 300 Subsaharian Africa Emerging Countries 250 Latin America Near and Middle East 200 World Europe centrale 150 Industrialized Emerging Asia Countries 100 European Countries 50 The regional risk index is the average of the country risk @rating weightedaccording to the share of each country in the regional GDPThe base ofthe index is the world risk in 2000 Japan North America LOWEST RISK Regional risk index

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