This paper constitutes a country rating of the Argentine Republic. Firstly, the country and its economy will be described briefly. In the following, the Argentine Republic will be rated by the usage of the methodology of the credit rating agency Moody’s. Moody's is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets cf.
After that, an example of an export-oriented sector serves as a case-study to be closer analyzed with regard to potential, arising risks, while doing business with Argentina and the implicated country rating. Finally, a statistically-based forecast for the underlying business sector will be developed.
Table of Contents
1. Introduction
2. Description of Argentina and its economy
3. Country Rating of Argentina
3.1. Economic Strength
3.2. Institutional Strength
3.3. Fiscal Strength
3.4. Susceptibility to Event Risk
3.5. Final Rating
4. Automotive Industry in Argentina
4.1. Potential risks
4.2. Implication of the country rating
5. Statistically-based forecast of vehicle sales
6. Conclusion
Objectives & Thematic Focus
This paper aims to evaluate the sovereign credit risk of the Argentine Republic by applying the Moody’s credit rating methodology, followed by a sector-specific analysis of the automotive industry and a quantitative sales forecast.
- Sovereign credit risk assessment of Argentina
- Application of Moody’s rating framework (economic, institutional, fiscal, and event risk)
- Analysis of the automotive industry as a key economic sector
- Evaluation of operational risks including inflation and trade policy
- Statistically-based vehicle sales forecasting using double exponential smoothing
Excerpt from the Book
3.1. Economic Strength
To determine a country’s resilience capacity it is essential to value the intrinsic strength of the economy by focusing on growth potential, diversification, competitiveness, national income and scale. The ability to generate revenues and service debt is dependent on fostering economic growth and prosperity. Past sovereign defaults showed that lacking in “Economic Strength” seems to be the main issue, which often occurs in countries with weak economic prospects. Moreover, a countries competitiveness is highly influenceable by trade shocks. In that case, large diversified economies are much more persistent against external shocks than smaller non-diversified countries.
The following “Illustration 5” shows the results of the individual rankings of the “Economic Strength’s” sub-factor indicators: Average Real GDP Growth Volatility in Real GDP Growth WEF Global Competitiveness Index Nominal GDP GDP per Capita
Summary of Chapters
1. Introduction: Outlines the objective of performing a country rating for Argentina and defines the scope, including a case study on the automotive sector and a statistical sales forecast.
2. Description of Argentina and its economy: Provides an overview of Argentina's demographic, political, and economic landscape, highlighting its reliance on agricultural exports and the impact of recent business-friendly reforms.
3. Country Rating of Argentina: Examines Argentina's credit risk through four key factors: economic, institutional, and fiscal strength, as well as susceptibility to event risk, resulting in a B2 rating.
4. Automotive Industry in Argentina: Analyzes the challenges for foreign companies in the automotive sector, such as inflation, import restrictions, and legal hurdles, and discusses the implications of the country rating on this industry.
5. Statistically-based forecast of vehicle sales: Applies time series analysis and double exponential smoothing to create a quantitative projection for future vehicle sales in Argentina.
6. Conclusion: Summarizes the findings, noting that despite structural economic challenges, Argentina shows growth potential and a path toward improved credit standing.
Keywords
Argentina, Country Rating, Moody's, Economic Strength, Institutional Strength, Fiscal Strength, Automotive Industry, Credit Risk, Inflation, Forecasting, Double Exponential Smoothing, GDP, Foreign Direct Investment, Sovereign Default, Vehicle Sales
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on assessing the creditworthiness of Argentina using the Moody’s sovereign rating methodology and analyzing the automotive sector's business environment.
What are the central thematic fields covered?
The key themes include macroeconomic analysis, sovereign risk assessment, sectoral business risks (specifically automotive), and quantitative time series forecasting.
What is the core research goal?
The goal is to determine Argentina's sovereign credit rating (B2) and analyze how this rating and existing market risks impact the automotive business sector.
Which scientific method is utilized?
The author uses a qualitative rating framework based on Moody’s criteria and a quantitative approach using double exponential smoothing for sales forecasting.
What is covered in the main section?
The main sections include a detailed breakdown of the four pillars of credit rating, an analysis of risks for the automotive industry, and a statistical sales forecast model.
Which keywords best characterize this work?
Key terms include Argentina, Country Rating, Credit Risk, Automotive Industry, Macroeconomics, and Exponential Smoothing.
How is the automotive industry specifically impacted by the country rating?
The B2 rating indicates high credit risk, which impacts the industry through higher capital costs and increased vulnerability to inflation and external economic shocks.
Why was the double exponential smoothing method chosen for the forecast?
It was chosen because it effectively forecasts data series that exhibit trends but lack seasonal components, making it suitable for predicting vehicle sales.
- Quote paper
- Tobias Hinterwimmer (Author), 2018, Financial Planning and Rating. Rating of Argentina and Analysis of the Automotive Sales with Forecasting Data, Munich, GRIN Verlag, https://www.grin.com/document/456654
