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Sovereign Rating Policy And Methodology

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The Islamic International Rating Agency “IIRA” offers ratings of all types for sovereign borrowers and related institutions. Moreover before assigning a credit rating to an issue or issuer in a country, IIRA must first assign a sovereign rating to the country to establish a credit benchmark and sovereign ceiling for foreign currency transactions. IIRA evaluates the creditworthiness of the government of that country, determining its ability and willingness to fully service its financial obligations on time.

A government is almost always the most creditworthy entity in a country because of its powers to tax, print money, and control the allocation of foreign exchange. No financial institution or company in a country can match these powers; therefore, they are by definition less able to meet their financial obligations than the central government. Hence, the ratings of non-governmental institutions will have a rating below that of the sovereign or at best equal to it in some cases.

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