How do countries benefit or hurt as their ratings change? How will India benefit it its rating is improved

Abstract

Sovereign Ratings are nothing but the credit ratings of a country. They are a measure of the potential risk of investing in a country inclusive of political risks. A credit rating agency comes up with these ratings after a detailed analysis of the country’s economic and political condition. Sovereign ratings are particularly important for developing countries to ease their ability of raising funds in the international bond markets. These ratings are also help FDI’s (Foreign Direct Investments) with their investment decisions.i ii The importance of credit ratings has increased over the years as more countries with greater default risks have started borrowing in the international financial markets.