The Analyst - By CA. Varun Anirudhan, ACA, FRM

Country Risk Analysis Management of Credit Risk at times goes beyond just managing a portfolio of corporates and FIs. At the macro level, we may have to allocate country limits for cross border exposures or at times may have to underwrite a Sovereign with regards to investments into its debt securities or public sector entities. Viewing a Company or an FI, despite how large it may, would appear as an achievable task, spelling out from the very basic business model to its earnings ab ility or debt management. But what about a country? How do we comprehend its enormous budgets, deficits, geo-political risks and currency management? Well, we will have to take it one bit at a time, and then try to pull it all together as a puzzle and pray it makes sens e. I’ve listed below the major building blocks of Country analysis and how to approach each of those. 1.     GDP Gross Domestic Product, as the name goes, shows what gets produced in a country in a year. Now how do we estim...