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 down as investors do not demand a premium for the risk they take on when buying Danish government bonds (and thus lending the government money).
The Kingdom of Denmark's credit rating
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Domestic debt |
Foreign debt |
Outlook |
Most recently confirmed |
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Long |
Short |
Long |
Short |
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Standard & Poor’s |
AAA |
A-1+ |
AAA |
A-1+ |
Stable |
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Fitch Ratings |
AAA |
F1+ |
AAA |
F1+ |
Stable |
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Moody’s |
Aaa |
P-1 |
Aaa |
P-1 |
Stable |
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DBRS Rating |
AAA |
R-1 (high) |
AAA |
R-1 (high) |
Stable |
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Scope Ratings |
AAA |
S-1+ |
AAA |
S-1+ |
Stable |
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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 countries when 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 as also having ongoing contact with credit rating agencies.
Countries with a high credit rating pay less to borrow
Note:
Credit ratings and yields on 10-year government bonds for selected European countries. Countries with lower credit ratings have higher interest costs. The interest rates in the chart are par rates and calculated as the average of daily interest rates in 2024. To make euro rates and Danish rates more comparable, a 3-month EUR/DKK forward with an implied interest rate differential of 38 basis points has been added.
Source:
Nordea Analytics and Fitch Ratings.