Creditworthiness: Introduction, Sovereign State & Security : Finance Basics

In this video tutorial, we will discuss the basics of creditworthiness, how to assess the creditworthiness of a Sovereign State, how to assess the creditworthiness of Securities, why are Credit rating agencies important, etc.
This is Part 2 of the video on Creditworthiness
#Creditworthiness #CreditRating #wallstreetmojo #Securityrating #SovereignStatesrating #S&P #Fitch #moody

Chapters:
00:00 - Introduction
00:15 - What is creditworthiness?
00:32 -Whom does creditworthiness apply to?
00:37 - What are the criteria of creditworthiness?
00:45 - Which are the biggest Credit rating agencies?
01:05 - How to assess the creditworthiness of a Sovereign State?
01:53 - What does a low credit rating means for a Sovereign State?
02:10 - How do Top rating agencies rate a Sovereign State?
02:17 - How to assess the creditworthiness of Securities?
02:20 - What are securities?
03:07 - Why are Credit rating agencies required or important?
03:50 - Conclusion

(Explained in detail in the video)
In part 1, we covered the meaning of creditworthiness and the evaluation of the creditworthiness of individuals.
In this Part 2 of the Creditworthiness video, we will cover the creditworthiness of Sovereign States & securities!
(Explained in detail in the video)

Creditworthiness for the Sovereign States
A state cannot exert its financial or political risk rating to invest in its debt instruments. Sovereign states will receive a Sovereign Credit Rating, an independent evaluation.
A third-party credit rating agency will give a country a rating based on how risky it is in terms of its economy and government. A country's creditworthiness will go down if it has a big budget deficit.

A low credit rating means that they are not a good credit risk, which could make it hard for them to get money from the global market and other bodies.
(Explained in detail in the video)

Creditworthiness of Securities
Securities are just financial instruments to raise funds in capital markets. There are three kinds of securities: equity, debt, and Hybrid. Securities are put through the same test that lenders use to decide whether or not to lend money to a company. The securities are also evaluated with credit ratings. The financial success and strength of a security can be judged by its credit rating.

Following the 2008 Global Financial Crisis, credit agencies were chastised for assigning high credit ratings to loans that ultimately proved to be high-risk investments. They failed to identify dangers that would have alerted investors to avoid certain forms of debt, such as mortgage-backed securities.

(Explained in detail in the video)
But now the systems are said to be proofed and the agencies have improved their processes.
What are your views on the creditworthiness & credit rating agencies processes!
Do share in the comment section below!
Don’t forget to subscribe and vote a thumbs-up for our videos.

==========================================================================
Subscribe to Our Channel –