The country risk literature argues that country risk ratings have a direct impact on the cost
of borrowings as they reflect the probability of debt default by a country. An improvement
in country risk ratings, or country creditworthiness, will lower a country's cost of
borrowing and debt servicing obligations, and vice-versa. In this context, it is useful to
analyse country risk ratings data, much like financial data, in terms of the time series
patterns, as such an analysis provides policy makers and industry stakeholders with a more
accurate method of forecasting future changes in the risks and returns associated with
country risk ratings.
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