Investment grade status provides premium: IMF paper
A paper by the International Monetary Fund, published on Tuesday, shows evidence that an upgrade to sovereign investment grade status by rating agencies significantly reduces financing costs above the expectations of macroeconomic fundamentals.
Catalina Tejada and Laura Jaramillo, the paper's authors, use data for 35 emerging markets between 1997 and 2010 to examine the effects on a sovereign upgrade from non-investment to investment grade on markets spreads.
The results indicate that reaching
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