Dancing to their tune: Credit Rating Agencies, sovereign risk, and financing conditions in the Global South

This report analyses how the Big Three credit rating agencies — Moody’s, S&P and Fitch — shape sovereign financing conditions across the Global South. Drawing on nine country case studies, including Argentina, Belize, Colombia, Ecuador, Indonesia, the Maldives, Pakistan, Sri Lanka and Zambia, it shows how rating actions can amplify market stress, raise borrowing costs and narrow policy space. The report highlights that more than 95 per cent of sovereign downgrades in 2020 affected emerging and developing economies, while climate shocks, debt restructurings and public spending decisions continue to be translated into tighter financing conditions.

Authors: Bhumika Muchhala (Third World Network); Jorge Luna (Latindadd); Maria Syed (Third World Network); Patricia Miranda (Latindadd)

Descripción

Credit rating agencies are often presented as neutral providers of information, but their decisions have direct consequences for countries’ access to finance, debt-servicing costs and development prospects. This report examines the structural biases, methodological flaws and procyclical effects of the current sovereign rating system, showing how it can penalise countries precisely when they need greater fiscal space to respond to economic, social and climate crises. It also puts forward reform pathways, including more transparent and long-term rating methodologies, as well as regional and multilateral alternatives to the highly concentrated rating architecture.

Published on 4 June, 2026

Read the full report here