Credit insurer Coface analyzes the risk of default on short-term trading transactions for companies operating in 160 different countries. These Country Risk assessments result in ratings on a seven-step scale: A1, A2, A3, A4, B, C, D, in order of increasing risk.

A country with an A1 rating has the following characteristics: very good macroeconomic and financial outlook; stable political context; good-quality business climate. This environment positively influences company payment behavior. The average probability of default is very low.

Risk environments for the high-growth countries identified in this article aren’t that low, with ratings of A4 to D. The definitions of these country ratings are set forth in the table below.

COUNTRYRATINGS-Coface

Coface also assesses business climate, looking at factors such as the legal system and the availability and reliability of company reports, using the same seven-step scale.

A country with an A1 business climate rating has the following characteristics: company reports (generally) available and reliable; effective debt collection; high-quality institutions; very satisfactory business environment.

The definitions associated with the business climate ratings referenced in the accompanying article are set forth below.

BIZCLIMATE-Coface