Moody’s Investors Service, (“Moody’s”) has today changed the outlook on Germany’s Aaa government bond rating to stable from negative. Concurrently, Moody’s has affirmed Germany’s Aaa ratings.
The key drivers for today’s outlook change are:
(1) Diminished risks that Germany’s government balance sheet will be affected by further collective support to other euro area countries, in particular to Italy (Baa2 stable) or Spain (Baa2 positive), along with reduced contagion risks within the wider euro area.
(2) Progress with respect to fiscal consolidation as reflected in nearly balanced budgets in 2012 and 2013 and a declining debt-to-GDP ratio.
(3) Diminished risks that Germany’s government balance sheet will be affected by a further crystallization of contingent liabilities from the German banking system.
Moody’s has affirmed Germany’s Aaa rating due to the country’s advanced and diversified economy, very high debt affordability and a history of stability-oriented macroeconomic policies.
In a related rating action, Moody’s has today changed the outlook to stable from negative on the Aaa rating from of FMS-Wertmanagement (FMS-WM) and affirmed FMS-WM’s Aaa and Prime-1 ratings.
FMS-WM is a resolution agency or “bad bank” scheme for 100% state-owned Hypo Real Estate Group created under the Financial Market Stabilisation legislation in Germany. FMS-WM is rated on par with the German sovereign. This is due to a loss compensation obligation from the Financial Market Stabilisation Fund vis-à-vis FMS-WM, which is ultimately an obligation of the German sovereign.
RATIONALE FOR OUTLOOK CHANGE
–FIRST DRIVER: DECLINING RISKS FROM EURO AREA DEBT CRISIS– >> Read More
11 February 2014 - 12:03 pm
Moody’s Investors Service says that the emergence of a strong coalition as a result of the upcoming general elections in India (Baa3 stable) would not act as a near-term game changer for Indian creditworthiness.
However, a fragmented government without either a clear mandate or policy platform would heighten downside credit risks.
As indicated, Moody’s does not believe that a strong showing by one of the major parties would, by itself, translate into an immediate improvement in India’s economic growth and fiscal consolidation, which are key determinants of the country’s overall credit quality.
“Firstly, growth trends over the past few decades show little direct correlation with election outcomes. Secondly, the influence of external conditions on Indian growth is underappreciated, and developed country growth and global liquidity trends will be crucial determinants,” says Rahul Ghosh, a Moody’s Vice President and Senior Research Analyst.
Moreover, the increasing importance of regional parties will continue to hamper the efficacy of nationwide policymaking, regardless of the political complexion of the eventual central government. >> Read More
07 February 2014 - 23:40 pm
Fitch Ratings-London-07 February 2014: Fitch Ratings has downgraded Ukraine’s Long-term foreign currency Issuer Default Rating (IDR) to ‘CCC’ from ‘B-’, and affirmed the Long-term local currency IDR at ‘B-’. The Outlook on the local currency IDR is Negative.
The issue ratings on Ukraine’s senior unsecured foreign and local currency bonds are also downgraded to ‘CCC’ from ‘B-’ and affirmed at ‘B-’ respectively. The Country Ceiling is downgraded to ‘CCC’ from ‘B-’ and the Short-term foreign currency IDR is downgraded to ‘C’ from ‘B’.
Under EU credit rating agency (CRA) regulation, the publication of sovereign reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch’s sovereign rating on Ukraine was 28 February 2014, but Fitch believes that developments in Ukraine warrant such a deviation from the calendar and our rationale for this is laid out below.
KEY RATING DRIVERS >> Read More
06 February 2014 - 0:10 am
Moody’s Investors Service has today upgraded Mexico’s government bond ratings to A3 from Baa1. The outlook is stable.
The decision to upgrade Mexico’s sovereign ratings was driven by the structural reforms approved last year, which Moody’s expects will strengthen the country’s potential growth prospects and fiscal fundamentals. As the full impact of the reforms becomes more evident over time, Moody’s expects that Mexico’s credit metrics will report firm – but gradual – improvements, thereby further reinforcing the country’s already robust sovereign credit profile.
Specifically, the upgrade of Mexico’s sovereign ratings was driven by the following four factors linked to the country’s reform package:
- Approval of a comprehensive reform agenda, which reflects political will to address longstanding structural issues
- Improved medium-term economic prospects associated with higher potential growth that is likely to result from the comprehensive reform package
- A strengthened fiscal outlook that incorporates higher government savings and additional buffers >> Read More
10 January 2014 - 7:19 am
Hong Kong-09 January 2014: Positive pressure on Emerging Asian sovereign ratings has ebbed as the region’s vulnerabilities have moved increasingly into focus, Fitch Ratings says in a report published today.
Economies with greater external funding needs and less resilient policy frameworks are likely to be more at risk from market stresses stemming from the tapering of the US Federal Reserve’s bond-buying programme. Policy management will be key in shielding sovereign credit profiles from these stresses, particularly for India and Indonesia, Fitch said in the report.
Fitch expects economies in Emerging Asia to grow 6.5% in 2014 – still the strongest of any global region, but the slowest pace since the regional crisis year of 1998. If regional giants China and India are excluded, the agency projects growth in Emerging Asia to be 5.1%. The main factors weighing on growth prospects, particularly in the ASEAN region, include maturing credit cycles, slower growth in China and falling commodity prices.
Tighter US dollar funding conditions highlight the levels of leverage and the issue of external sustainability for regional economies. However, Fitch thinks the strengthening of sovereign credit fundamentals since the 1998 Asian crisis should see the region navigate these challenges without systemic stress. Seven of nine Emerging Asian sovereigns are on a Stable Outlook. >> Read More
08 January 2014 - 10:13 am
Fitch Ratings will hold a teleconference to discuss the outlook for Asia-Pacific Sovereign Ratings at 4pm (Hong Kong/Singapore time) on Monday, 13 January 2014. The call is in conjunction with the agency’s reports “2014 Outlook: Emerging Asia Sovereigns” and “Asia-Pacific Sovereign Overview”, to be published on 10-13 January 2013.
Fitch expects the Emerging Asia economy to expand 6.5% in 2014 – still the strongest growth of any global region, but the slowest regional rate since the crisis year 1998. Tighter US dollar funding conditions are bringing some of the region’s vulnerabilities into focus. Economies with higher external funding needs and less resilient policy frameworks are likely to be most at risk from market stresses driven by tapering of the US Federal Reserve’s bond-buying programme. Meanwhile, the outlook for rebalancing and reform in China is a source of uncertainty not just for China’s own credit profile, but also for the regional and global economy.
Andrew Colquhoun, Head of Asia-Pacific Sovereign Ratings, will host the call.
Participants are requested to complete online registration ahead of the call at this link:
13 December 2013 - 12:40 pm
Standard & Poor's Ratings
Services said today that it had upgraded India-based information technology
services providers Infosys Ltd. and Wipro Ltd.
Corporate Credit Rating A-/Stable/-- BBB+/Watch Pos/--
Corporate Credit Rating A-/Stable/-- BBB+/Watch Pos/--
>> Read More
11 December 2013 - 18:23 pm
India’s sovereign rating may come under pressure if general elections due by May next year end up with a hung Parliament or with a government unable to push through reforms, Standard & Poor’s (S&P’s) said on Wednesday.
“If it is a hung Parliament or if the government is unable to effect reforms, definitely by implication the rating will come under pressure,” said Terry Chan, credit analyst at Standard & Poor’s during a teleconference with reporters.
S&P has a “negative” outlook on India’s sovereign ratings, meaning any downgrade from its current “BBB-minus” would place the country’s debt in so-called “junk’ category.
02 December 2013 - 19:19 pm
Standard and Poor’s, Fitch and Moody’s – the “Big Three” credit rating agencies (CRAs) that score EU government debt – could face further action after failing to fix “inadequate practices from the past”.
The European Securities and Markets Authority (ESMA) published the results today of its probe into how the three agencies compiled ratings on sovereign bonds between February and October this year.
The regulator said it has not determined whether any of its findings constitute a breach of the CRA Regulation, and “may take action as appropriate in due course”.
ESMA said it had found deficiencies when it came to confidentiality, conflicts of interest, a lack of adequate resources and staff being used, and the delays seen in the publishing of ratings. It said it has required “remedial action plans” to be put in place by the agencies to address the problems.
The watchdog’s chair, Steven Maijoor (pictured), said the shortcomings uncovered “could pose risks to the quality, independence and integrity of the ratings and of the rating process.” He went on: >> Read More
25 November 2013 - 11:00 am
Standard & Poor’s says the Abenomics growth programme has improved the near-term prospects for Japan, but it warns it could still cut the credit rating of the world’s third-largest economy.
S&P rates Japan AA-. the fourth-highest investment-grade rating, but its outlook is negative and it sees a “more than one-third chance” of cutting the rating “within two years.”
The ratings agency says Tokyo’s recent efforts to hike the national sales tax and end deflation are encouraging, but they “still fall short of putting the country on a stable path to mending its fiscal problems.”
Among the worries at S&P are uncertainty about the government’s commitment to curb bloated spending, as well as companies’ high exposure to the country’ government debt.
Japan’s debt-to-GDP ratio, north of 200 per cent, is by the highest in the developed world. S&P writes:
Government stimulus and monetary easing appear to have pumped enough confidence into Japan to successfully kick-start economic growth, for now. However, a host of risks – including an unwinding of quantitative easing in the U.S. and a rising sales tax – hang over efforts to end deflation and repair the nation’s public finances, in our view.