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Sovereign Risk

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Sovereign risk
The risk that a central bank will impose foreign exchange regulations that will reduce or negate the value of foreign exchange contracts. Also refers to the risk of government default on a loan made to a country or guaranteed by it. The government's part of political risk.
Sovereign Risk
In foreign exchange, the risk that a foreign central bank will significantly alter its monetary policy or other foreign exchange regulations so that it significantly affects one's currency trades. More broadly, it can apply to any political risk that a nation will refuse to comply with an agreement to which it is a party. For example, if one conducts a currency trade involving a pegged currency and the country in question decides to let its currency float, it can significantly impact the profitability of the currency trade. See also: Liquidity risk, Credit risk.
sovereign risk
The risk of owning the security of an issuer in a country other than the one in which the investor lives. For example, an investor residing in the United States incurs sovereign risk in purchasing a bond issued by the government of Brazil. This risk stems from the fact that a foreign country may nationalize its private businesses, stop paying interest, or repudiate its debt.
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Although EIB is policy-driven rather than profit-maximising, the bank consistently generates profits and has never recorded an operating loss," said Alexander Kockerbeck, a Vice President-Senior Credit Officer in Moody's Sovereign Risk Group.
EIB maintains sound financial practices, says Moody's by Financial Mirror (Cyprus)
Although highly unlikely, it is conceivable that a large and wealthy economy could lose its Aaa rating if it were to experience a material and irreversible deterioration in its debt conditions over the next five years or so," said Pierre Cailleteau, managing director of Moody's Sovereign Risk Group.
Top economies to keep best ratings: Moody's by AFP / AFP Global Edition
Electric power and gas utilities are more likely than other Japanese firms to be affected by sovereign risk, it said.
S&P ratings for Japan firms not linked to sovereign outlook revision by Japan Weekly Monitor
 
 
 
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