Does the "issuer-pay" model hold also for sovereign credit ratings? Do States pay for having their bond being rated?
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$\begingroup$ good question .. not "too" quant but good ;) $\endgroup$– Richi WaCommented May 27, 2016 at 18:25
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$\begingroup$ any idea where I can find an answer?! $\endgroup$– Elena De FalcoCommented May 30, 2016 at 11:48
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1$\begingroup$ If this was for me: no, no idea. And my remark was not sarcastic only .. ;) it really is a good question. $\endgroup$– Richi WaCommented May 30, 2016 at 18:04
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The "issuer-pay" model works like this: The Rating Agency goes to the issuer and says "We heard that you are going to issue bonds. We can give you a rating if you pay us XXX dollars. It will help you a lot to have our rating". The Issuer of course is free to refuse this offer (after all this is just a rating agency, not the Cosa Nostra). In this case the rating agency can still rate the issuer if it wants to (for a variety of reasons, for example to allow comparison with other issuers). I believe the big countries (United Kingdom, USA, etc.) fall in the latter case: they never pay for ratings, so they are rated gratis (at no charge). In general it will depend on the country's judgement of whether they need a rating or not.
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$\begingroup$ It is quite disconcerting to read the most famous italian Mafia Group here, since i'm italian and passionate crime-films watcher. But this is off topic. I think all rated countries pay for the rating, otherwise, if I don't pay for a rating but i'm rated anyway, no one will pay for a rating. $\endgroup$– simmyCommented May 28, 2016 at 6:25
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1$\begingroup$ Could you provide me some paper or some relevant and reliable sources talking about this topic? Because I cannot find anything on the web, and there are a lot of people claiming for the contrary.. $\endgroup$ Commented May 30, 2016 at 11:47