Who Decides What Creditworthiness Means?
Executive Summary
Pedro Lange Machado’s 2026 paper argues that sovereign credit rating agencies embed a market-liberal theory of the state into the technical apparatus of creditworthiness, rewarding fiscal restraint and creditor protection while penalising the debt restructuring and public investment that climate adaptation requires. This essay accepts that diagnosis (for the purposes of asking a different question) and asks the question Machado leaves open: who, exactly, holds the authority to change it?
The answer requires separating three things commonly collapsed into one. Authorship of the concept, which characteristics count as evidence of a government's capacity to repay, is shared among the agencies, the Fund, the World Bank and a long professional tradition. Authorship of the operationalisation - the scorecards, weights, caps and overlays that turn those characteristics into a number - belongs substantially to S&P Global, Moody’s, and Fitch, and the essay documents that architecture in detail. Authorship through recognition, whether a rating is treated as meaningful by Basel weightings, index rules and portfolio mandates, belongs almost entirely to the wider financial system the agencies do not control.
The evidence bears this distinction out. The World Bank’s governance indicators sit inside the agencies’ scorecards as validated, weighted variables; climate risk does not, not because it is suppressed, but because it has not yet accumulated the decades of tested track record against realised outcomes that governance indicators have. Oligopoly, far from obviously sheltering the incumbents to experiment, is a structure built by regulators in 1936 and 1975 that the empirical record associates with eroded rather than sharpened rigour, though the commercial incentive this creates remains an inference rather than a demonstrated fact. Governments retain real agency to perform well against the given categories, as EU accession states did, but the evidence that any government has redefined those categories - AfCRA included - is considerably weaker.
The conclusion this essay reaches is that Machado’s market-liberal content is real, but its persistence is better explained as an institutional settlement distributed across raters, investors, regulators, and professional communities than as a conviction lodged inside three firms. That distinction matters practically. Persuading a rating committee to think differently would not, on its own, change what creditworthiness means, so long as the settlement around it continues to treat the old definition as the reasonable one.
