Institutional Investor Index
What Was the Institutional Investor Index?
The Institutional Investor Index, otherwise called the Country Credit Survey, was a measure of sovereign credit risk that was distributed twice per year in the March and September issues of Institutional Investor magazine.
Institutional Investor magazine started distributing the Institutional Investor Index in the late 1970s when the field of risk assessment was in its beginning phases. Today, the Institutional Investor Index is not generally distributed, having stopped publication in March 2016.
Understanding the Institutional Investor Index
The Institutional Investor Index was a country risk assessment model accessible to investors. Country risk alludes to an assortment of risks related to investing in a foreign country, including political risk, exchange rate risk, economic risk, sovereign risk, and transfer risk. Country risk is an important consideration for those interested in investing abroad.
At the point when the Institutional Investor Index was first distributed, state run administrations and agencies like the World Bank and the International Monetary Fund (IMF) didn't consistently uncover data on which to measure the credit risk of sovereign debt. Investors and banks had insignificant data on which to simply decide; all things considered, they depended on belief system and presumptions to evaluate global credit quality.
The Institutional Investor Index intended to make up for this shortfall by requesting survey reactions from somewhere in the range of 75 and 100 investment bank research divisions. The respondents were requested to give assessments from a specific country's creditworthiness. Their responses were then weighted as per the respondent's bank's global exposure and the perceived quality of that country's financial reporting standards. The subsequent scores went from 0 to 100, showing an exceptionally high and extremely low likelihood of default, individually.
Today, investors have a lot more resources to go to with regards to evaluating a country's creditworthiness. These incorporate credit rating agencies, international organizations, and states themselves.
The last Institutional Investor Index was distributed in March 2016. Today, the distributer centers around surveying buy-side and sell-side analysis as well as portfolio managers to decide their perspective with regards to the world's best investor relations programs and executives.
Certifiable Example
The last (March 2016) version of the Institutional Investor Index considered Switzerland, Norway, and Germany to be the three most credit-commendable countries in the world, with scores of 95.2, 94.8, and 94.7, separately.
The United States positioned in fourth place, with a score of 93.4. To put these scores in context, the global average rating of the 179 countries surveyed was 44.7. Rounding out the main 10 countries with the best credit ratings were Luxembourg, Singapore, Sweden, Canada, Netherlands, and Denmark.
At the other extreme were Somalia, South Sudan, and Zimbabwe. These were found to be the world's least credit-commendable countries, with scores of 3.3, 6.3, and 6.8, separately. Rounding out the last 10 countries were Sudan, North Korea, Central African Republic, Syria, Yemen, Guinea-Bissau, and Afghanistan.
The Index would likewise accompany an overall analysis of the credit ratings around the world. For instance, in March 2016, the Index assessed that overall European ratings rose and that emerging market countries additionally posted boundless gains. It recognized that Greece's rating improved from its large slide during its debt crisis yet that it actually had a ton of ground to recuperate.
The report likewise noticed that of the best 20 positioned countries, just South Korea posted a gain of in excess of a point in its credit score, while Canada and Finland experienced falls. The report would incorporate realities of how the World Bank covered the global growth forecast as well as talking about changes in interest rates.
Highlights
- It was expected to assist investors with exploring the complex risks associated with investing abroad when it was more challenging to gain data on foreign countries.
- Today, investors have numerous resources to browse, including credit rating agencies, international organizations, and the actual legislatures.
- The Institutional Investor Index was a measure of sovereign credit risk that was distributed by Institutional Investor Magazine from the late 1970s until March 2016.
- Today, Institutional Investor magazine centers around surveying buy-side and sell-side analysis as well as portfolio managers to decide their perspective concerning the world's best investor relations programs and executives.
- Country credit risk incorporates political risk, exchange rate risk, economic risk, sovereign risk, and transfer risk.
