DEFINITION of 'Institutional Investor Index'

A measure of sovereign debt risk that is published biannually in the March and September issues of Institutional Investor magazine. The Institutional Investor Index is an indicator used to identify and measure economic conditions of booms and crises. The Index is constructed by requesting survey responses from between 75 and 100 investment bank research departments (such as loan officers with major multinational banks) who provide evaluations of a particular country or countries. The answers are then weighted in accordance with the particular bank's global exposure and the level of sophistication for that country's analysis systems.

BREAKING DOWN 'Institutional Investor Index'

The Institutional Investor Index is a country risk assessment model available to investors. Country risk refers to a collection of risks related to investing in a foreign country, including political risk, exchange rate risk, economic risk, sovereign risk and transfer risk. Country risk is an important consideration for individuals and institutions interested in foreign investments. The Institutional Investor Index is based on responses made my bank officers who provide subjective evaluations of a particular country's credit quality. The scores of the Index range from 0 (zero), implying certain default, to 100 which implies no probability for default.

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