n South African Journal of Economic and Management Sciences - A proposed quantitative credit-rating rating methodology for South African provincial department

Volume 19, Issue 2
  • ISSN : 1015-8812
  • E-ISSN: 2222-3436



The development of sub-national credit-rating methodologies affords benefits for sub-nationals, the sovereign and its citizens. Trusted credit ratings facilitate access to financial markets and above-average ratings allow for the negotiation of better collateral and guarantee agreements, as well as for funding of, for example, infrastructure projects at superior (lower) interest rates. This paper develops the quantitative section of a credit-rating methodology for South African sub-nationals. The unique characteristics of South African data, their assembly, and the selection of dependent and independent variables for the linear-regression model chosen, are discussed. The methodology is then applied to the provincial Department of Health using linear regression modelling.

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