Sovereign credit ratings, assigned by credit rating agencies like Moody's and Standard & Poor's, have become increasingly important as more governments and companies seek to access international capital markets. These ratings assess the creditworthiness of national governments and influence borrowing costs. This study analyzes the determinants and impact of these ratings, using data from 1995 to examine how ratings are determined and how they affect market yields. The study finds that ratings are largely based on a small number of well-defined criteria, with both agencies using similar factors. The market generally agrees with the ratings assigned by these agencies. Ratings have an independent influence on yields, especially for non-investment-grade sovereigns. Rating announcements can have immediate effects on market pricing. The study identifies eight key variables that influence sovereign ratings: per capita income, GDP growth, inflation, external debt, economic development, and default history. Regression analysis shows that these variables are significant in determining ratings. Ratings are closely related to sovereign bond yields, with the single rating variable explaining 92% of the variation in spreads. Ratings provide additional information beyond standard macroeconomic indicators. Rating announcements have a significant impact on bond spreads. Event studies show that announcements lead to immediate changes in spreads, with negative announcements causing spreads to rise and positive announcements causing them to fall. The impact is more pronounced for speculative-grade sovereigns than for investment-grade ones. The study also finds that market anticipation does not significantly reduce the impact of rating announcements, as confirmed by event study analysis. In conclusion, sovereign credit ratings are important in financial markets and provide information that goes beyond public data. While the agencies' ratings have a predictable component, they also offer insights into non-investment-grade sovereigns that are not available in public data. Despite the difficulty in measuring sovereign risk, especially for below-investment-grade borrowers, sovereign credit ratings remain valuable in pricing issues.Sovereign credit ratings, assigned by credit rating agencies like Moody's and Standard & Poor's, have become increasingly important as more governments and companies seek to access international capital markets. These ratings assess the creditworthiness of national governments and influence borrowing costs. This study analyzes the determinants and impact of these ratings, using data from 1995 to examine how ratings are determined and how they affect market yields. The study finds that ratings are largely based on a small number of well-defined criteria, with both agencies using similar factors. The market generally agrees with the ratings assigned by these agencies. Ratings have an independent influence on yields, especially for non-investment-grade sovereigns. Rating announcements can have immediate effects on market pricing. The study identifies eight key variables that influence sovereign ratings: per capita income, GDP growth, inflation, external debt, economic development, and default history. Regression analysis shows that these variables are significant in determining ratings. Ratings are closely related to sovereign bond yields, with the single rating variable explaining 92% of the variation in spreads. Ratings provide additional information beyond standard macroeconomic indicators. Rating announcements have a significant impact on bond spreads. Event studies show that announcements lead to immediate changes in spreads, with negative announcements causing spreads to rise and positive announcements causing them to fall. The impact is more pronounced for speculative-grade sovereigns than for investment-grade ones. The study also finds that market anticipation does not significantly reduce the impact of rating announcements, as confirmed by event study analysis. In conclusion, sovereign credit ratings are important in financial markets and provide information that goes beyond public data. While the agencies' ratings have a predictable component, they also offer insights into non-investment-grade sovereigns that are not available in public data. Despite the difficulty in measuring sovereign risk, especially for below-investment-grade borrowers, sovereign credit ratings remain valuable in pricing issues.