Credit Rating of Countries

by

China Chengxin, Dagong, Moody’s, Dominion Bond Rating Service (DBRS),

Fitch Ratings,S&P.

Presentation by

Vignesh P Kudva

4NY13MBA71

China Chengxin

China Chengxin Credit Rating Group was found in 1992 through the incorporation of China Chengxin Credit Management Co Ltd, which is the first nation-wide credit rating company of China. China ChengxinCredit Rating Group released the sovereign credit rating report for 30 countries first time in July 2012.

Countries Rating Outcome Date

Brazil BBBg+ Stable 2012-07

China AAg+ Stable 2012-07

Germany AAg+ Stable 2012-07

Greece Cg N/A 2012-07

India BBBg Stable 2012-07

Japan AAg+ Stable 2012-07

United Kingdom AAg+ Stable 2013-03

United States AAAg Stable 2012-07

Rating Process

Increase in the free flow of global capital has widened contagion risks in international financial markets. In the aftermath of the financial crises over the past two decades, regulators have stepped up their regulatory measures to restore market confidence. Market participants have deepened their understanding of credit risks and enriched their knowledge of risk management. Investors now demand objective, reliable, and forward-looking credit ratings from credit rating service providers, commonly known as credit rating agencies.

Credit Rating PrinciplesCCXAP holds fast its credit rating principles of independence, integrity, creditability and fairness which are materialized in its micro, macro, dynamic and static analyses.

Micro-analysis and Macro-analysis

The core of micro-analysis is the measurement of the creditworthiness of a corporation or a corporate issue that requires an in-depth evaluation of the rated entity’s intrinsic financial capacity. However, such evaluation does not take into account the level of external protection that may be available from its holding company or from any external guarantor or credit enhancement collaterals. Macro-analysis focuses on macroeconomics, such as, market demand, industry characteristics and growth prospects, effects of industry policies and a corporation's ability to minimize risks. It also measures the level of protection from external support available to the rated entity and its debt issue. Strong external support can compensate for financial weakness to a certain extent.

Dynamic Analysis and Static Analysis

Dynamic analysis focuses on the ability of a rated entity to repay debt on time. It is important to monitor changes in the creditworthiness and the possibility default of a rated entity during the credit analysis process. In predicting future business prospects and financial conditions, it is necessary to look at the rated entity’s business performance track record and the characteristics of the industry cycle that may impact on the rated entity’s future financial position. CCXAP also notes and follows news that may affect the credit worthiness and repayment ability of the rated entity. Static analysis focuses on historical data analysis, which has an interactive relationship with and also informs the carrying out of dynamic analysis.

Rating Methodology

Qualitative Analysis and Quantitative Analysis

Qualitative analysis is adopted to analyze a rated entity’s business risk with respect to the macro-economic and industrial

environment, whereas quantitative analysis is adopted to assess a rated entity’s financial risk. These two analytical modules

form the basis for CCXAP’s credit rating methodology, qualitative analysis, and quantitative analysis. They are interactive

with each other during the rating process; therefore, the support of quantitative data is essential in making a judgment on the

rated entity’s business operating risk. For quantitative analysis on a rated entity’s financial conditions, it is necessary to take

into account qualitative theories and the business-operating analysis to forecast the rated entity’s future financial condition.

CCXAP’s quantitative analysis focuses on the rated entity’s future cash flow and relevant financial figures. Other financial

ratios calculated and analyzed are also directed to the cash flow analysis.

CCXAP’s qualitative analysis focuses on the factors that affect the ability to generate cash flow. Under normal circumstances,

a rated entity with adequate operational cash flow has a higher ability to provide better protection to meet its financial

obligations on time.

The integral analytical model, comprising qualitative analysis and quantitative analysis, can predict the probability of default

from various dimensions and to analyze the major credit determinants, both internal and external, that affects the default

probability. Based on CCXAP’s credit rating principles and methodology, an analyst does his or her independent analysis of

the credit worthiness of a rating entity, evaluating its internal credit factors and the relevant external environment.

Credit Determinants

Primary and Secondary Credit Determinants

CCXAP categorizes credit determinants into primary and secondary. Default probability is the primary credit determinant,

followed by the secondary determinants including, but not limited to, issue seniority, expected recovery ability after default,

and future credit stability.

Amongst the secondary credit determinants, issue seniority and expected recovery rate are often applied to the analysis of

creditworthiness of issues with lower credit ratings, whilst credit stability analysis is applied to issues with higher credit

ratings. The weighting of secondary credit determinants is reviewed in accordance with the substantial changes in market

conditions and the economic environment.

CCXAP makes credit prediction according to different industry sectors where a rated entity is located. Calculation of the loss

rate in a default case is based on historical facts and current empirical data. Such calculation is forward looking. When there

are significant changes that may affect the current loss rate or when there are determinants that may affect the calculating

parameters, CCXAP will immediately review the situation to ensure consistency and comparability of its rating standards.

Preliminary Rating Adjustment

After completing a preliminary credit rating recommendation, CCXAP will then measure the rated entity’s repayment capacity

by using a macroscopic stress test in key areas such as the extent of GDP decline and unemployment rate trend that the credit

rating can withstand.

Issuer Credit Rating and Debt Issue Credit Rating

Issuer Credit Rating

In evaluating the creditworthiness of a rated entity, CCXAP emphasizes the analysis of the financial capacity of a rated entity to meet its financialobligations on time. This requires a forward-looking estimate of the rated entity’s future income and the cash flow generated from business operations andinvestments.

Industry Analysis

Analyzing the developmental trend and regulatory environment of an industry helps deepen the understanding of industry risk and background risk. It isnecessary to understand the industry life-cycle where the rated entity is situated, in particular, for those industries whose industry life-cycle is apparent.Therefore, it is necessary to identify the stage of the industry life-cycle when the credit analysis is being carried out. Analyzing the respective industry’smarket structure, market concentration, and price trend will indicate a rated entity’s future profitability. For certain industries such as banking and mining,analysis of the respective industry’s regulatory requirements and limitations must not be neglected.

Management Risk Analysis

CCXAP considers a rated entity’s management quality, its experience, and the ways it deals with risks are the core areas in assessing the rated entity’smanagement competency and objectives. Its senior management must be interviewed since they are the key persons who define the rated entity’s policiesand formulate its business strategies. Through interviewing a rated entity’s management, analysts can know the rated entity’s corporate history, vision andmission; its willingness and tendency to undertake and manage risks; its business strategies, internal-control standards and financial control rigorousness.

Business Operating Risk Analysis

On business operating risk analysis, CCXAP stresses a rated entity’s market positioning, relative strength to business competitors, and the impact ofglobalization. CCXAP looks into the cash flow risk the rated entity may encounter. An in-depth analysis is carried out on the rated entity’s capitalcommitment, growth prospects, operating income sources, stability of purchasing, and distribution channels and pricing power.

Financial Risk Analysis

Financial risk analysis is the primary work of CCXAP to reach a credit rating result. A rated entity’s cash flow mainly relies on the profitability

of its core business. Financial flexibility is an important factor in determining an entity’s solvency position and the ways that a rated entity uses

to obtain sufficient funds from different sources to deal with financial challenges arising from unforeseeable circumstances.

CCXAP chooses different methods of cash flow analysis for specific rated entities in different industries. CCXAP broadly classifies industries

into four categories; fast developing industries, high cash demand industries, fast recovery industries and stable cash flow industries. Based on

the characteristics of an industry, CCXAP analyzes its key financial data, which includes, but is not limited to, debt level, debt components, debt

asset ratio, currency risk, interest risk, and short term debt amounts.

Debt Issue Credit Rating

Ranking of Debt Issues

The degree of default risk of a debt issue is also reflected in its seniority ranking. A senior debt’s ranking is higher than that of a subordinated

debt issued by the same issuer. Specific repayment restrictions stated in the terms of a debt issue may affect the credit rating result as well.

Credit Enhancement by Guarantee or Collateral

A debt issue’s credit rating can be enhanced by guarantee or collateral, therefore, the credit quality of guarantor or collateral is one of the key

factors affecting the credit rating of the debt issue. CCXAP applies the same rating principles and methodology to analyze the credit worthiness

of the respective guarantor or collateral as to the rated entity or debt issue.

Dagong

Dagong is a credit rating agency based in China. It is one of the few notable non-US based credit rating agencies.

Rating ScaleLong-term credit ratings:

Dagong rates borrowers on a scale from AAA to C. Intermediate ratings are offered at each level between AA and CC (e.g., AA+, AA, and AA-).

AAA: Highest credit rating

AA: Very High credit rating

A: High credit rating

BBB: Medium credit rating

BB: Low medium credit rating

B: Relatively low credit rating

CCC: Low credit rating

CC: Very low credit rating.

C: Lowest credit rating. Issuer is unable to meet financial obligations and possibly in the process of bankruptcy.

Short-term credit ratings

Debt with maturity dates of 1 year or shorter are rated on a scale from A-1 to D. No intermediate ratings (e.g., B+ and B-) are used.

A-1: Highest credit rating

A-2: Good credit rating

A-3: Fair credit rating

B: Significant speculative credit rating

C: High default risk credit rating

D: Default

Country Rating Outcome Date

Bangladesh BB- Stable 2012-06

Brazil A- Negative 2013-01

China AA+ Stable 2012-12

Germany AA+ Stable 2012-09

Greece CC Negative 11-05-2012

India BBB+ Negative 2012-08

Japan AA- Stable 02-06-2011

Pakistan CCC Negative 2012-09

Sri Lanka B+ Negative 18-03-2013

United Kingdom A+ Negative 01-08-2013

United States A- Negative 17-10-2013

Moody’s

Moody's Investors Service, often referred to as Moody's, is the bond credit rating businessof Moody's Corporation, representing the company's traditional line of business and itshistorical name. Moody's Investors Service provides international financial researchon bonds issued by commercial and government entities and, with Standard &Poor's and Fitch Group, is considered one of the Big Three credit rating agencies.

The company ranks the creditworthiness of borrowers using a standardized ratings scalewhich measures expected investor loss in the event of default. Moody's Investors Servicerates debt securities in several market segments related to public and commercial securitiesin the bond market. These include government, municipal and corporate bonds; managedinvestments such as money market funds, fixed-income funds and hedge funds; financialinstitutions including banks and non-bank finance companies; and asset classes in structuredfinance. In Moody's Investors Service's ratings system securities are assigned a rating fromAaa to C, with Aaa being the highest quality and C the lowest quality.

Moody's was founded by John Moody in 1909 to produce manuals of statistics related tostocks and bonds and bond ratings. In 1975, the company was identified as a NationallyRecognized Statistical Rating Organization (NRSRO) by the U.S. Securities and ExchangeCommission. Following several decades of ownership by Dun & Bradstreet, Moody'sInvestors Service became a separate company in 2000; Moody's Corporation wasestablished as a holding company.

Investment grade

Rating Long-term ratingsShort-term ratings

Aaa Rated as the highest quality and lowest credit risk. Prime-1

Best ability to repay short-term

debt

Aa1

Rated as high quality and very low credit risk.Aa2

Aa3

A1

Rated as upper-medium grade and low credit risk.

Prime-1/Prime-2

Best ability or high ability to

repay short term debtA2

A3

Baa1

Rated as medium grade, with some speculative elements

and moderate credit risk.

Prime-2

High ability to repay short term

debtBaa2

Baa3

Prime-2/Prime-3

High ability or acceptable ability

to repay short term debt

Prime-3

Acceptable ability to repay short

term debt

Speculative grade

Rating Long-term ratingsShort-term ratings

Ba1Judged to have speculative elements and a significant

credit risk.

Not Prime

Do not fall within any of the

prime categories

Ba2

Ba3

B1

Judged as being speculative and a high credit risk.B2

B3

Caa1

Rated as poor quality and very high credit risk.Caa2

Caa3

Ca

Judged to be highly speculative and with likelihood of

being near or in default, but some possibility of

recovering principal and interest.

CRated as the lowest quality, usually in default and low

likelihood of recovering principal or interest.

Country Rating Outcome Date

Bangladesh Ba3 Stable 05-08-2011

Brazil Baa2 Stable 05-08-2011

China Aa3 Stable 05-08-2011

Germany Aaa Stable 06-09-2013

Greece Caa1 Stable 01-08-2014

India Baa3 Stable 05-08-2011

Japan Aa3 Stable 23-08-2011

Pakistan Caa1 Negative 13-07-2012

Sri Lanka B1 Positive 05-08-2011

United Kingdom Aa1 Stable 22-02-2013

United States Aaa Negative 05-08-2011

Dominion Bond Rating Service (DBRS)DBRS is a credit rating agency (CRA) founded in 1976 (originally known as Dominion Bond Rating Service) in Toronto by Mr Walter Schroeder, who is currently chairman of the ratings agency. DBRS is the largest rating agency in Canada with other offices in New York, Chicago, and London. DBRS comprises three affiliated operating companies – DBRS Limited; DBRS, Inc.; and DBRS Ratings Limited. David Schroeder is the agency’s CEO. Dan Curry serves as president. DBRS is the fourth largest ratings agency in the world, with about a 2.5% global market share.

DBRS is registered as a Nationally Recognized Statistical Rating Organization from the United States’ Securities and Exchange Commission (SEC), one of only 10 companies to hold the designation. DBRS is also registered with the European Securities and Markets Authority (ESMA) and with the Ontario Securities Commission (OSC) in Canada.

The company is one of only four CRAs, along with larger competitors Standard & Poor’s, Moody's Investors Service, and Fitch Ratings, to receive ECAI recognition from the European Central Bank (ECB). That designation indicates CRAs whose ratings can be used by the ECB to determine collateral requirements for borrowing from the ECB.

Rating Scale: Long-Term Obligations

The DBRS long-term rating scale provides an opinion on the risk of default. That is, the risk that an issuer will fail to satisfy its financial

obligations in accordance with the terms under which an obligations has been issued. Ratings are based on quantitative and qualitative

considerations relevant to the issuer, and the relative ranking of claims. All rating categories other than AAA and D also contain

subcategories “(high)” and “(low)”. The absence of either a “(high)” or “(low)” designation indicates the rating is in the middle of the

category. DBRS’s scale is similar to the ones used by Standard & Poor’s and Fitch Ratings, though it uses (high) and (low) instead of “+”

and “–“ symbols like S&P and Fitch use.

AAA: Highest credit quality. The capacity for the payment of financial obligations is exceptionally high and unlikely to be adversely affected

by future events.

AA: Superior credit quality. The capacity for the payment of financial obligations is considered high. Credit quality differs from AAA only to

a small degree. Unlikely to be significantly vulnerable to future events.

A: Good credit quality. The capacity for the payment of financial obligations is substantial, but of lesser credit quality than AA. May be

vulnerable to future events, but qualifying negative factors are considered manageable.

BBB: Adequate credit quality. The capacity for the payment of financial obligations is considered acceptable. May be vulnerable to future

events.

BB: Speculative, non-investment-grade credit quality. The capacity for the payment of financial obligations is uncertain. Vulnerable to future

events.

B: Highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet financial obligations.

CCC / CC / C: Very highly speculative credit quality. In danger of defaulting on financial obligations. There is little difference between

these three categories, although CC and C ratings are normally applied to obligations that are seen as highly likely to default, or subordinated

to obligations rated in the CCC to B range. Obligations in respect of which default has not technically taken place but is considered

inevitable may be rated in the C category.

D: A financial obligation has not been met or it is clear that a financial obligation will not be met in the near future or a debt instrument has

been subject to a distressed exchange. A downgrade to D may not immediately follow an insolvency or restructuring filing as grace periods

or extenuating circumstances may exist.

Rating Scale: Commercial Paper and Short-Term Debt

The DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner. Ratings are based on quantitative and qualitative considerations relevant to the issuer and the relative ranking of claims. The R-1 and R-2 rating categories are further denoted by the subcategories “(high)”, “(middle)”, and “(low)”.

R-1 (high): Highest credit quality. The capacity for the payment of short-term financial obligations as they fall due is exceptionally high. Unlikely to be adversely affected by future events.

R-1 (middle): Superior credit quality. The capacity for the payment of short-term financial obligations as they fall due is very high. Differs from R-1 (high) by a relatively modest degree. Unlikely to be significantly vulnerable to future events.

R-1 (low): Good credit quality. The capacity for the payment of short-term financial obligations as they fall due is substantial. Overall strength is not as favourable as higher rating categories. May be vulnerable to future events, but qualifying negative factors are considered manageable.

R-2 (high): Upper end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events.

R-2 (middle): Adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events or may be exposed to other factors that could reduce credit quality.

R-2 (low): Lower end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events. A number of challenges are present that could affect the issuer’s ability to meet such obligations.

R-3: Lowest end of adequate credit quality. There is a capacity for the payment of short-term financial obligations as they fall due. May be vulnerable to future events and the certainty of meeting such obligations could be impacted by a variety of developments.

R-4: Speculative credit quality. The capacity for the payment of short-term financial obligations as they fall due is uncertain.

R-5: Highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet short-term financial obligations as they fall due.

D: A financial obligation has not been met or it is clear that a financial obligation will not be met in the near future, or a debt instrument has been subject to a distressed exchange. A downgrade to D may not immediately follow an insolvency or restructuring filing as grace periods, other procedural considerations, or extenuating circumstance may exist.

DBRS European Sovereign Debt Ratings as of Aug. 19, 2013

DBRS European Sovereign Debt Ratings as of Aug. 19, 2013

Country Rating Outcome Date

Brazil BBB Stable 01-08-2014

European Union AAA Stable 11-07-2014

Germany AAA Stable 11-04-2014

Greece B Stable 11-07-2014

India BBB(low) Stable 30-09-2013

Japan A(high) Stable 20-11-2013

United Kingdom AAA Stable 18-07-2014

United States AAA Stable 22-04-2014

Fitch Ratings

Fitch Ratings Inc. is a jointly owned subsidiary of Hearst Corporation and FIMALAC SA. On April 12, 2012, Hearst increased their stake in the Fitch Group to 50%.Previously, Hearst owned a 40% stake in the company, while FIMALAC was the majority owner with 60% stake. Fitch Ratings and Fitch Solutions are part of the Fitch Group.

Fitch Ratings is dual-headquartered in New York, USA, and London, UK. It was one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975, together with Moody's and Standard & Poor's, and the three are commonly known as the "Big Three credit rating agencies".

The firm was founded by John Knowles Fitch on December 24, 1913 in New York City as the Fitch Publishing Company. It merged with London-based IBCA Limited in December 1997. In 2000 Fitch acquired both Chicago-based Duff & Phelps Credit Rating Co. (April) and Thomson Financial Bank Watch (December). Fitch Ratings is the smallest of the "big three" NRSROs, covering a more limited share of the market than S&P and Moody's, though it has grown with acquisitions and frequently positions itself as a "tie-breaker" when the other two agencies have ratings similar, but not equal, in scale.

In September 2011, Fitch Group announced the sale of Algorithmic (risk analytics software) to IBM for $387 million. The deal closed on October 21, 2011.

Long-term credit ratingsFitch Ratings' long-term credit ratings are assigned on an alphabetic scale from 'AAA' to 'D', first introduced in 1924 and later adopted and licensed by S&P. (Moody's also uses a similar scale, but names the categories differently.) Like S&P, Fitch also uses intermediate +/- modifiers for each category between AA and CCC (e.g., AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, etc.).

Investment grade

AAA : the best quality companies, reliable and stable

AA : quality companies, a bit higher risk than AAA

A : economic situation can affect finance

BBB : medium class companies, which are satisfactory at the moment

Non-investment grade

BB : more prone to changes in the economy

B : financial situation varies noticeably

CCC : currently vulnerable and dependent on favorable economic conditions to meet its commitments

CC : highly vulnerable, very speculative bonds

C : highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations

D : has defaulted on obligations and Fitch believes that it will generally default on most or all obligations

NR : not publicly rated

Short-term credit ratingsFitch's short-term ratings indicate the potential level of default within a 12-month period.

F1+ : best quality grade, indicating exceptionally strong capacity of obligor to meet its financial commitment

F1 : best quality grade, indicating strong capacity of obligor to meet its financial commitment

F2 : good quality grade with satisfactory capacity of obligor to meet its financial commitment

F3 : fair quality grade with adequate capacity of obligor to meet its financial commitment but near term adverse conditions could impact the obligor's commitments

B : of speculative nature and obligor has minimal capacity to meet its commitment and vulnerability to short term adverse changes in financial and economic conditions

C : possibility of default is high and the financial commitment of the obligor are dependent upon sustained, favourable business and economic conditions

D : the obligor is in default as it has failed on its financial commitments.

Country Rating Outcome Date

Brazil BBB Stable 21-11-2011

China A+ Stable 21-11-2011

Germany AAA Stable 21-11-2011

Greece B Stable 23-05-2014

India BBB- Stable 12-06-2013

Japan A+ Negative 22-05-2012

Sri Lanka BB- Stable 21-11-2011

United Kingdom AA+ Stable 19-04-2013

United States AAA Stable 21-03-2014

Standard & Poor

Standard & Poor's Financial Services LLC (S&P) is an American financial services company. It is a division of McGraw Hill Financial that publishes financial research and analysis on stocks and bonds. S&P is known for its stock market indices such as the U.S.-based S&P 500, the Canadian S&P/TSX, and the Australian S&P/ASX 200. S&P is considered one of the Big Three credit-rating agencies, which also include Moody's Investor Service and Fitch Ratings. Its head office is located on 55 Water Street in Lower Manhattan, New York City.

Long term credit ratingWorld countries by Standard & Poor's Sovereign Rating:

The company rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC

(e.g., BBB+, BBB and BBB-). For some borrowers, the company may also offer guidance (termed a "credit watch") as to

whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).

Investment Grade

AAA: An obligor rated 'AAA' has extremely strong capacity to meet its financial commitments. 'AAA' is the highest issuer

credit rating assigned by Standard & Poor's.

AA: An obligor rated 'AA' has very strong capacity to meet its financial commitments. It differs from the highest-rated

obligors only to a small degree. Includes:

AA+: equivalent to Moody's Aa1 (high quality, with very low credit risk, but susceptibility to long-term risks appears

somewhat greater)

AA: equivalent to Aa2

AA-: equivalent to Aa3

A: An obligor rated 'A' has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse

effects of changes in circumstances and economic conditions than obligors in higher-rated categories.

A+: equivalent to A1

A: equivalent to A2

BBB: An obligor rated 'BBB' has adequate capacity to meet its financial commitments. However, adverse economic

conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial

commitments.

Non-Investment Grade (also known as speculative-grade)

BB: An obligor rated 'BB' is less vulnerable in the near term than other lower-rated obligors.However, it faces major ongoing uncertainties and exposure to adverse business, financial, oreconomic conditions, which could lead to the obligor's inadequate capacity to meet its financialcommitments.

B: An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor currently hasthe capacity to meet its financial commitments. Adverse business, financial, or economic conditionswill likely impair the obligor's capacity or willingness to meet its financial commitments.

CCC: An obligor rated 'CCC' is currently vulnerable, and is dependent upon favourable business,financial, and economic conditions to meet its financial commitments.

CC: An obligor rated 'CC' is currently highly vulnerable.

C: highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations

R: An obligor rated 'R' is under regulatory supervision owing to its financial condition. During thependency of the regulatory supervision, the regulators may have the power to favour one class ofobligations over others or pay some obligations and not others.

SD: has selectively defaulted on some obligations

D: has defaulted on obligations and S&P believes that it will generally default on most or allobligations

NR: not rated

Short-term issue credit ratings

The company rates specific issues on a scale from A-1 to D. Within the A-1 category it can be designated with a plus sign (+). This indicates that the issuer's commitment to meet its obligation is very strong. Country risk and currency of repayment of the obligor to meet the issue obligation are factored into the credit analysis and reflected in the issue rating.

A-1: obligor's capacity to meet its financial commitment on the obligation is strong

A-2: is susceptible to adverse economic conditions however the obligor's capacity to meet its financial commitment on the obligation is satisfactory

A-3: adverse economic conditions are likely to weaken the obligor's capacity to meet its financial commitment on the obligation

B: has significant speculative characteristics. The obligor currently has the capacity to meet its financial obligation but faces major ongoing uncertainties that could impact its financial commitment on the obligation

C: currently vulnerable to non-payment and is dependent upon favourable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation

D: is in payment default. Obligation not made on due date and grace period may not have expired. The rating is also used upon the filing of a bankruptcy petition.

Country Rating Outcome Date

Bangladesh BB- Stable 20-02-2012

Brazil BBB- Stable 24-03-2014

China AA- Stable 20-02-2012

European Union AA+ Stable 20-12-2013

Germany AAA Stable 27-03-2013

India BBB- Negative 25-04-2012

Japan AA- Negative 29-11-2011

Pakistan B- Stable 29-11-2011

United Kingdom AAA Stable 13-04-2012

United States AA+ Stable 10-06-2013

Source

• http://www.jcr.co.jp/english/rat_poli/pdf/top_cont_5.pdf

• http://www.jcr.co.jp/english/rat_poli/pdf/top_cont_1.pdf

• http://www.jcr.co.jp/english/rat_poli/pdf/top_cont_3.pdf

• http://www.jcr.co.jp/english/rat_poli/pdf/top_cont_2.pdf

• http://www.jcr.co.jp/english/rat_sove/methodology.php

• http://en.wikipedia.org/wiki/Dominion_Bond_Rating_Service

• http://en.wikipedia.org/wiki/Fitch_Ratings

• http://en.wikipedia.org/wiki/Standard_%26_Poor%27s#Credit_ratings

• http://en.wikipedia.org/wiki/Moody%27s_Investors_Service

• http://en.wikipedia.org/wiki/Credit_rating_agency

• http://en.wikipedia.org/wiki/Japan_Credit_Rating_Agency

• http://en.wikipedia.org/wiki/A._M._Best

• http://www.defaultrisk.com/