ECO 601 - Country Risk Analysis

Investments in emerging economies may provide significant returns but may also entail substantial risks. How does one analyze the non-financial risks of investing in foreign countries? How does one assess the credit and political risks associated with debt and/or equity investments in say Brazil or India, Saudi Arabia or Bahrain, China or Indonesia? Is sovereign, sub-sovereign, and state-owned enterprise (SOE) risks one of the same? How does one differentiate between them? What if the country I am analyzing as a potential investment isn’t rated by international credit agencies? Does the sector matter? This course provides students with the conceptual underpinnings of analyzing country risks. It uses macroeconomics and microeconomics to examine four major areas of importance, namely the real economy, fiscal, monetary and external accounts. It focuses on real case examples and exposes students to data sources and the modus-operandi of country risk rating committees that are often the backbone process of country credit risk analysis. Students will develop an initial ability to analyze country risk and its use for investment decisions.

Concentrations - Finance / International Business