Sovereign risk rating systems

The article in Business Standard raises the issue of the competency of the Moody's and other rating agencies in rating sovereign risk. It also provides valid points on how the rating agencies "which do not rate the US Treasury bonds and Bills and always assigns them AAA as they are backed by the full faith and credit of the US government which has the ability to raise taxes andpay the bonds" against using the same logic for the other sovereign agencies.

Also, the author provides a valid framework for rating the sovereign debt which he says "The main lacuna in the rating agencies argument is that they have not distinguished between sovereign debt financed domestically and sovereign debt financed internationally"

In all he questions the validity of the ratings as well as their downgrades and upgrades.