What factors does Standard & Poor’s analyze in determining the credit rating it assigns a sovereign government?

Answer: In rating a sovereign government, Standard & Poor’s analyze centers approximately an examination of the degree of economic risk and political risk.  In assessing political risk, Standard & Poor’s examines the stability of the political system, the social environment, and international relations along with other the countries. Issues examined in assessing economic risk include the sovereign’s external financial position, economic structure and growth, management of the economy, balance of payments flexibility and economic prospects.  The rating assigned a sovereign is specifically important because it generally denotes the ceiling for ratings S&P will assign an obligation of an entity domiciled within that country.