This dissertation provides new insights about the determinants of sovereign credit ratings by the three major credit rating agencies—Moody’s, Standard & Poor’s (S&P), and Fitch, from 1995 to 2023. Sovereign credit ratings are essential for global financial markets, influencing borrowing costs and investment decisions by assessing a country’s creditworthiness. This study aims to identify and evaluate the key macroeconomic, institutional, and governance factors influencing these ratings. The analysis uses a comprehensive panel dataset of 137 countries from 1995 to 2023, capturing sovereign ratings, economic indicators, and governance metrics. Ratings are assigned numerical scores, allowing for regression analysis. Linear regression methods were employed to estimate the impact of variables such as GDP per capita, inflation rate, real GDP growth, government debt as a percentage of GDP, and corruption control. Countries are further classified into two categories: “Advanced Economies” and “Emerging Markets,” to explore potential differences in rating determinants. The findings confirm that corruption control has a significant and positive impact on sovereign credit ratings across all three agencies, highlighting the importance of governance quality. Additionally, higher GDP per capita and real GDP growth positively influence ratings, while inflation and government debt negatively affect them. Advanced economies benefit from higher baseline creditworthiness and governance quality, leading to smaller coefficients for economic indicators. In contrast, emerging markets show greater sensitivity to GDP per capita, inflation, and government debt, reflecting their higher economic and institutional vulnerabilities. This research contributes to the understanding of how sovereign credit ratings are determined, emphasizing the importance of institutional reforms, particularly in emerging markets, to enhance creditworthiness. The results offer valuable insights for policymakers seeking to improve their countries’ ratings and foster sustainable economic growth.

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