Top 5 Countries With Best Credit Ratings For Sovereign Bonds

At the request of a country, rating agencies such as Moody’s assign a rating by assessing the country’s economic and political environment. A country’s rating reflects the country’s creditworthiness; that is, it is a measure of a country’s debt situation and, in the lender’s opinion, how likely it is that the country will not meet its payment obligations. For investors, a country’s rating is a standard measure for assessing the risk of a particular country’s bonds, including political risk. Developing countries attach great importance to having a good sovereign rating in order to attract foreign investment and access financing in the international bond market. Generally, countries with higher debt-to-GDP ratios face higher credit risk.

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Look at the 5 countries with best Moody’s credit rating for sovereign bonds.

5. Switzerland

• Moody’s Credit Rating: AAA
• Moody’s Credit Rating Outlook (February 2023): Stable
• GDP (2024): USD 816.46 billion

Switzerland ranks 5th among countries with the best sovereign credit ratings by Moody’s. Switzerland’s real GDP growth rate is expected to be 1.3% in 2024, and it also has one of the lowest total debt-to-GDP ratios at 36%. Moody’s issued a stable credit outlook for Switzerland in February 2023, and Fitch issued a stable outlook in April 2024.

4. Netherlands

• Moody’s Credit Rating: AAA
• Moody’s Credit Rating Outlook (February 2023): Stable
• GDP (2024): $1.33 trillion

The Netherlands is one of the few European countries with a GDP (PPP) exceeding $1 trillion. Due to weak economic conditions across the continent, the Netherlands is expected to grow at a relatively slow rate of 0.6% in 2024. Total Dutch debt will reach 47% of GDP in 2024.

3. Australia

• Moody’s Credit Rating: AAA
• Moody’s Credit Rating Outlook (June 2022): Stable
• GDP (2024): US$1.79 trillion

Real GDP growth of 1.5% is expected to reach almost 49% of GDP in 2024 for the Australian economy. Australia has a stable credit rating and is ranked 3rd among countries with Moody’s highest sovereign credit ratings.

2. Canada

• Moody’s Credit Rating: AAA
• Moody’s Credit Rating Outlook (May 2024): Stable
• GDP (2024): $2.47 trillion

Canada is one of the world’s largest economies by GDP (PPP) of approximately $2.5 trillion. Canada’s total debt ratio will be almost 105% of GDP in 2024. The North American country is expected to grow by 1.2% in 2024 and is ranked 2nd among countries with Moody’s highest sovereign credit ratings.

1. Germany

• Moody’s Credit Rating: AAA
• Moody’s Credit Rating Outlook (February 2023): Stable
• GDP (2024): USD 5.69 Trillion

With a GDP (PPP) of USD 5.69 trillion, Germany ranks first among countries with the highest sovereign credit ratings by Moody’s. Moody’s gave Germany a stable credit outlook in February 2023 and Fitch also gave it a stable outlook in March 2024. Germany’s total debt ratio will be close to 64% in 2024.