As easy-to-extract mineral resources become increasingly scarce, investors in the energy and mining sectors are turning to companies with resource projects worldwide. When investing in a company operating in an unknown jurisdiction, it’s crucial to conduct a country risk assessment as part of your due diligence.
My Preferred Resources for Analyzing a Stock’s Country Risk
I prefer using the country risk assessments from the Coface Group and A.M. Best, as well as the quick look-up function provided by Credendo. However, when their ratings don’t align, I consult other resources to form my opinion on a country’s risk.
Here are the 11 free resources for your country risk analysis:
Register to create a free account, then search for a country to access Moody’s ratings and assessments.
When the data of the ‘government’ of your choice is being displayed, you can view Moody’s ratings by clicking on the Ratings & Assessments link. Now the Issuer Outlook link is also visible. Here you can inform yourself about Moody’s interpretation of that country’s future financial condition. To gain access to more in depth information about Moody’s country risk assessment you will be charged.
2. Standard & Poor’s
Just like with Moody’s you will first need to register to create a free account before you can access Standard & Poor’s country risk analysis.
You can find a country specific credit rating via the ‘Search by Entity bar’ on their website. I also inform myself about their opinion regarding the country’s “Creditwatch / Outlook”.
3. Fraser Institute
The Fraser Institute’s annual “Survey of Mining Companies” can be found via the search function on their website (click here).
Survey results represent the opinions of executives and managers regarding barriers to investment in various jurisdictions for mining investment around the globe.
4. Behre Dolbear
Since 1999, the Behre Dolbear Group Inc. has compiled a country risk assessment of countries of importance to the mining industry.
Their latest annual survey: 2014 Ranking of countries for mining investment where “NOT TO INVEST” can be found on Behre Dolbear’s website by clicking this link. You can also subscribe to their newsletter to read the latest news about the mining industry.
An additional great visual source of information regarding country risk analysis, is the website of Credendo, formally known as the Office National Du Ducroire (ONDD): the Belgium Export Credit Agency. Their information is based on the systematic analysis of each country’s political and financial situation. By clicking this link you will be taken to their special web page about country risk assessment.
EKN insures Swedish export companies against the risk of non-payment, thereby enabling them to conduct more secure export transactions.
In order to see which countries are covered in EKN’s country risk assessment, you can access their country list by clicking the link provided.
7. Economist Intelligence Unit
The Economist Intelligence Unit also has a specific country risk web page on their website which you can access directly by clicking here. You can register for free to gain access to country-specific information about politics, the economy and the general risk profile.
8. The Organization for Economic Co-operation and Development (OECD)
You can find the OECD’s Prevailing Country Risk Classification through a link at this page.
9. Basel Institute on Governance
The Basel AML Index is a country risk ranking to measure a country’s overall money laundering risk. The Public Version is freely accessible by clicking this link.
10. The Coface Group
The Coface Group is a trade risk expert and a worldwide leader in credit insurance. Coface’s country risk ratings can be accessed freely by selecting a country in the “country risk assessment” search bar, which you will find on their website by clicking here. Their analyses uses an eight-level ranking. In ascending order of risk, these are: A1, A2, A3, A4, B, C, D and E.
11. A.M. Best
A.M. Best is a credit rating organization serving the insurance industry. They place countries into one of five tiers, ranging from Country Risk Tier 1 (CRT-1), for countries with the least amount of risk, to Country Risk Tier 5 (CRT-5) for countries with the most risk. You can access A.M. Best’s page for conducting your stock’s country risk assessment by clicking the link provided.