The article by Richard Cantor and Frank Packer examines the determinants and impact of sovereign credit ratings assigned by Moody's Investors Service and Standard and Poor's. The authors find that the rating criteria used by these agencies are largely consistent, with a small number of well-defined factors being the primary determinants. These factors include per capita income, GDP growth, inflation, external debt, economic development, and default history. The market generally shares the relative rankings of sovereign credit risks as indicated by the agencies, and ratings appear to have an independent influence on yields beyond their correlation with other publicly available information. The article also investigates the impact of rating announcements on market yields, finding that these announcements can cause significant changes in bond yields, particularly for below-investment-grade sovereigns. The findings suggest that sovereign credit ratings provide valuable information to the market, especially for high-risk borrowers.The article by Richard Cantor and Frank Packer examines the determinants and impact of sovereign credit ratings assigned by Moody's Investors Service and Standard and Poor's. The authors find that the rating criteria used by these agencies are largely consistent, with a small number of well-defined factors being the primary determinants. These factors include per capita income, GDP growth, inflation, external debt, economic development, and default history. The market generally shares the relative rankings of sovereign credit risks as indicated by the agencies, and ratings appear to have an independent influence on yields beyond their correlation with other publicly available information. The article also investigates the impact of rating announcements on market yields, finding that these announcements can cause significant changes in bond yields, particularly for below-investment-grade sovereigns. The findings suggest that sovereign credit ratings provide valuable information to the market, especially for high-risk borrowers.