Moody’s an American financial credit rating agency. Nations requires huge amount of money to fulfill their basic obligations and to remain viable for the future with infrastructure, economic and social programs.
In many countries including developing countries taxes alone are not sufficient for this so these nations take out loan from international capital markets and award interest bearing securities also known as government bonds.
States and companies that takes out loans are called issuers this is where the rating agencies come in to play and their role as auditor of the credit worthiness of companies, financial products and governments.
They have substantial influence on international capital flows. This is particularly problematic in relation to nations. Moody’s as being a rating agency they also allot credit rating to countries. The rating reflects the probabilities of weather their borrowers will able to repay their dept.
According to Moody’s ‘AAA’ is the highest ratings whereas ‘D’ the better the ratings the lower the interest’s rates. The services by the rating agencies are originally paid by the investors who wanted to know where they can invest their money securely