The Danish central government is one of the few in the world to hold the highest possible credit rating (AAA/Aaa), with a stable outlook from the three largest international credit rating agencies. The high credit rating means that the state has the opportunity to borrow at lower interest rates than countries that have a lower credit rating. This helps to keep the government's total expenditure on financing the state's loans down.
What does s a high credit rating mean?
The kingdom of Denmark has a low level of debt, a sound debt structure and a robust economy with a stable outlook. This results in an AAA-rating. The central government’s total financing costs are kept downas investors do not demand a premium for the risk they take on when buying Danish government bonds (and thus lending the government money).
Why does the Kingdom of Denmark have a high credit rating?
This is because Danish government bonds are considered among the safest in the world. In the figure below, you can see the interest rates paid by different countrieswhen borrowing money from their creditors. The figure shows that Denmark is among the countries worldwide that pay least to borrow money.
The credit rating agencies particularly highlight that the way in which the economic policy has been designed makes the danish economy resilient to potential economic downturns and future structural imbalances. Denmark has a long tradition of having a high degree of fiscal policy discipline with a well-managed public budget. This has led to a low level of debt and a robust composition of government debt.
Government Debt Management at Danmarks Nationalbank is responsible for managing central government borrowing and debt, as well asalso having ongoing contact with credit rating agencies.
Countries with a high credit rating pay less to borrow
The Kingdom of Denmark's credit rating
Domestic debt | Foreign debt | Outlook | Most recently confirmed | |||
Long | Short | Long | Short | |||
Standard & Poor’s | AAA | A-1+ | AAA | A-1+ | Stabile | |
Fitch Ratings | AAA | F1+ | AAA | F1+ | Stabile | |
Moody’s | Aaa | P-1 | Aaa | P-1 | Stabile | |
DBRS Rating | AAA | R-1 (high) | AAA | R-1 (high) | Stabile | |
Scope Ratings | AAA | S-1+ | AAA | S-1+ | Stabile | |
