FINANCES OF THE INSTITUTIONAL SECTORS

STETSKO Mykola

Reliance of corporate capital investment interest upon sovereign credit rating

The article deals with the comprehensive research of influence of low national rating upon corporate investments and their interests. The author has indicated that low national rating and high risk bonuses assume capital outflow from industry into stock market. It is proved that sovereign ratings (due to investment risk bonuses) impact the local interest rates and, hence, determine corporate capital expenditures. National risk bonus impacts directly basic interest rate as well as average local market revenues. It is proved that one can decrease national risk bonus i.e. local interest rates with determining the ratios influencing the calculation of national rating. The article concentrates on the fact that governmental institutions and corporate authorities have to influence upon parameters defining national investment rating. Governmental reforms must focus on neutralization of macroeconomic risks and particularly on improvement of national investment climate as well as stabilization of macroeconomic indicators. The pricing and informative instruments for corporate finance have to be applied on the corporate level. These instruments are associated with finance controlling, value-oriented management, financial communication, and modern risk management.

Keywords: credit (sovereign) rating, country risk, cost of capital, risks, interest rates, corporate sector.

JEL: G30, G32.

STETSKO M. . Reliance of corporate capital investment interest upon sovereign credit rating / M. . STETSKO // Фінанси України. - 2015. - № 5. - C. 92-103.