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The Correlation of Sovereign Rating and Bonds’ Interest Rate in EU Member States

Transylvanian Review of Administrative Sciences

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Title The Correlation of Sovereign Rating and Bonds’ Interest Rate in EU Member States
 
Creator MIRICESCU, Emilian-Constantin; Associate Professor, Department of Finance, Facultyof Finance, Insurance, Banking and Stock Exchange, Center of Financial and Monetary Research, Bucharest University of Economic Studies, Bucharest, Romania
 
Subject central public administration, sovereign rating, interest rate, financial market.
 
Description The importance of borrowing is fundamental for central public administration and it consists in sources of f nancing budget def cit and ref nanc-ing government debt. In the last years, a lot of countries had diff culties regarding the payment of public loans at their maturity due to the burden of government debt to GDP ratio. In this situa-tion, investors lose their conf dence not only in the country that is facing problems, but also in other states that pay their debt at maturity. For this reason, they are careful at any change that affects sovereign rating. From our investigation we found that sover-eign rating has a negative inf uence on bonds’ interest rate. As such, decision makers from central public administration should focus on improving sovereign ratings in order to decrease interest rates.
 
Publisher Babes Bolyai University
 
Contributor This work was supported from the European Social Fund through Sectorial Operational Programme Human Resources Development 2007 – 2013, project number POSDRU/159/1.5/S/134197, project title “Performance and Excellence in Postdoctoral Research in Romanian E
 
Date 2015-06-17
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://rtsa.ro/tras/index.php/tras/article/view/442
 
Source Transylvanian Review of Administrative Sciences; 2015: Issue No. 45 E/June; 136-148
18422845
 
Language eng
 
Relation http://rtsa.ro/tras/index.php/tras/article/view/442/431
 
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