Bankers Issue Grades on Nations’ Credit Worthiness

The credit ratings of South Korea, Chile, Portugal, Iran and Tunisia have risen strongly in the past six months, a survey of international bankers shows.

But the bankers have sharply downgraded their ratings of Trinidad, Panama, Cuba, Norway, Gabon and Libya, according to the survey by Institutional Investor, a New York-based financial monthly magazine.

Every six months Institutional Investor asks about 100 international commercial banks to rate the credit worthiness of more than 100 countries on a scale of 0 to 100. Those with higher ratings generally find it easier to obtain loans and they tend to pay lower interest rates.

At the top are Japan and Switzerland, with ratings of 95.2 and 94.3, followed by West Germany with 93.8. The United States ranks fourth with 89.8 points.

At the bottom end of the scale are Nicaragua, which scored 4.7 out of 100, and North Korea at 3.6.

In its March edition, published last week, the magazine commented that “relative political stability boosted South Korea, while rising tensions hurt Panama. Economic gains underpinned rises for Spain and Portugal, Mauritius and Thailand, but hints of reduced Soviet aid set back Cuba.”

Since the last survey in September, 1988, “the biggest decline for a region was registered by Latin America,” where the average country rating dropped 0.6 points to 20.3.

The average rating of African nations dropped 0.2 to 19.0, the lowest rating of any world region.

“Can Latin America keep itself above perennial cellar-dweller Africa?” the magazine asks. “The trend line isn’t encouraging. In March, 1981, the gap between the two regions’ ratings was 13.3 points. Today it is 1.3 points.”

Latin America includes three of the Third World’s biggest debtors: Brazil, Mexico and Argentina.

The average rating of Western Europe’s 18 nations rose 0.5 points. “The region benefited in particular from strong gains in Spain, Portugal, Greece and Ireland, which all rose by more than one point.”

In the Asia-Pacific region, the biggest winner, South Korea, “was up 2.8 points, an Olympic-class rise that puts it 21st in the world, ahead of the Soviet Union.”

The Soviet Union slipped back one spot to 22nd, with a rating of 64.9.

In the Middle East, “the end of hostilities between Iran and Iraq boosted the former’s rating 2.1 points and the latter’s 1 point.”

In North America, Institutional Investor says, the United States appeared to “defy the laws of gravity” with a 0.2 gain since September, even though Washington “has shown no concrete signs of controlling its trade deficit, its budget deficit or its exchange rate.”