Extra-financial indicators play a key role in the analysis of sovereign debt

At Edmond de Rothschild Asset Management, the assessment of sovereign debt is based, amongst other things, on a financial model for analysing issues the takes account of both the budgetary and economic situation as well as banking risk. Since 2015, we have decided to round out this internal modally incorporating extra-financial indicators.

Collaboration between the Sovereign Debt and Responsible Investment teams enabled us to select a list of around 30 indicators relating to ESG (Environmental, Social and Governance) criteria that are likely to have a favourable impact on long-term growth in the countries in question. They also must be able to supplement, reinforce or moderate the purely financial view, for which the criteria are, overall, more closely correlated to short- and medium-term growth

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