Archives of “sovereign ratings” Tag

Fitch Affirms Germany at ‘AAA'; Outlook Stable (Full Text )

 Fitch Ratings has affirmed Germany’s Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘AAA’ with Stable Outlook. The agency has also affirmed the Short-term foreign currency IDR at ‘F1+’ and the Country Ceiling at ‘AAA’.

KEY RATING DRIVERS
The affirmation of Germany’s sovereign ratings reflects the following factors:
– The government has overachieved on some key fiscal targets. The general government structural balance was in surplus in 2012 for the first time since re-unification, well within the 0.5% of GDP deficit medium-term objective (MTO) set under the Stability and Growth Pact. The federal structural balance was also better than the 0.35% of deficit limit from 2016 set under the German constitution. This helped the government beat its target for the headline fiscal balance for a second consecutive year in 2012, with a surplus of 0.2% of GDP.

– Fitch believes the debt/GDP ratio has peaked. Germany has all the ingredients of a declining public debt path. The economy is growing, the budget position is relatively favourable and nominal interest rates are low. Furthermore, while debt at 81.9% of GDP in 2012 remains elevated compared with the ‘AAA’ median of 49%, it is within the range consistent with a ‘AAA’ rating.

– Risk from contingent liabilities from the eurozone crisis have eased. This reflects the recent strengthening of eurozone governance measures, including the implementation of the EU ‘two-pack’ regulation, which has enshrined fiscal consolidation in national economic policies. The ECB’s Outright Monetary Transactions has significantly eased some of the tail risks for the eurozone outlook. However, Fitch believes the eurozone crisis is not yet over and will require further country-level fiscal and structural adjustment, greater progress towards a banking union and a broad-based economic recovery across the currency union Read More  

Fitch Downgrades Egypt to ‘B-‘; Outlook Negative -Full Text

Fitch Ratings has downgraded Egypt’s Long-term foreign and local currency Issuer Default Ratings (IDRs) to ‘B-‘ from ‘B’. The Outlooks are Negative. The Short-term rating has been affirmed at ‘B’ and the Country Ceiling downgraded to ‘B-‘ from ‘B’.

KEY RATING DRIVERS

The downgrade of Egypt’s sovereign ratings reflects the following key rating drivers and their relative weights:-

High
– There is a risk of a material deterioration of domestic political stability, with downside risks for economic outcomes and creditworthiness. There is high uncertainty over how the risks resulting from the military coup evolve over the short term and the eventual pathway to a peaceful political transition.

– The political environment may make it harder to implement the fiscal and structural reforms necessary to secure an IMF programme.

– Heightened uncertainty and inflamed political tensions are likely to set back the recovery and may worsen already seriously deteriorated fiscal outcomes. Read More  

Outlook On Portugal Revised To Negative On Growing Political Uncertainties; ‘BB/B’ Ratings Affirmed-S&P (Full Text )

OVERVIEW
  • In our view, this week’s ministerial resignations complicate Portugal’s already-challenging policymaking environment and suggest even less room for maneuver than when we changed the rating outlook to stable in March 2013.
  • We believe that growing political uncertainty could derail Portugal’s forthcoming debt issuance and its hoped-for exit in 2014 from the Troika-sponsored support program.
  • We are therefore revising our outlook on the long-term sovereign credit ratings on Portugal to negative from stable.
  • The outlook revision reflects our opinion that we could lower the sovereign ratings on Portugal if growing political uncertainty slows its structural fiscal adjustment process and undermines support from official lenders, including the EU and IMF.
  • We are affirming our ‘BB/B’ long- and short-term sovereign credit ratings on Portugal. Read More  

Fitch Affirms United States at ‘AAA'; Outlook Remains Negative

Fitch Ratings has affirmed the United States (U.S.) Long-term foreign and local currency Issuer Default Ratings (IDRs) and Fitch-rated Treasury security ratings at ‘AAA’. Fitch has also affirmed the U.S. Country Ceiling at ‘AAA’ and Short-term foreign currency rating at ‘F1+’. The Outlook on the Long-term IDRs remains Negative.

KEY RATING DRIVERS
The affirmation reflects the U.S.’s strong economic and credit fundamentals, including the global reserve currency status of the U.S. dollar, and progress on reducing government budget deficits. The Outlook remains Negative due to continuing uncertainty over the prospect for additional deficit-reduction measures necessary to reduce government indebtedness over the medium to long term, and near-term risks associated with the expiration of federal appropriations authority at the end of the current fiscal year (30 September 2013) and in particular a timely increase in the debt limit.

Fitch will conduct a further review of the U.S. sovereign ratings by the end of 2013, which is expected to resolve the Negative Outlook. This review will reflect our assessment of the prospects for further deficit-reduction measures in future years necessary to contain government deficits in the face of long-term spending pressures and place public debt on a downward path.

The affirmation of the U.S. ‘AAA’ sovereign ratings with a Negative Outlook reflects the following key factors. Read More  

EU Twist Rules for Rating Agencies

Yesterday the EU announced new rules of the conduct of rating agencies in terms of their sovereign assessments. The rules appear aimed at making the changes of ratings less disruptive for the both issuers and investors, but does not appear to impact the substance of decisions or curtail their use.
 
Starting at the end of this year, the rating agencies must publish a calendar of dates for the year ahead of its sovereign rating reviews. The rating agencies will be restricted to three assessments a year of sovereigns who have neither asked not paid for a review. Such countries include Germany, France, Italy and the UK (and the US). Of the 128 sovereign ratings S&P provides, for example, 15 qualify as unsolicited, according to their website.

 
Rating agencies must give all sovereign issuers one full day notice of any changes before the public announcement and must review each every six months. Read More  

Fitch Affirms Japan at ‘A+'; Negative Outlook

Fitch Ratings has affirmed Japan’s Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘A+’ with a Negative Outlook. The Short-term IDR has been affirmed at ‘F1+’. The Country Ceiling has been affirmed at ‘AA+’.

The affirmation of Japan’s sovereign ratings in part reflects the greater commitment of the Bank of Japan and government to bring to an end two decades of economic stagnation and deflation. If successful and underpinned by structural reform to raise potential growth along with a credible medium-term deficit reduction plan, Japan’s adverse public debt dynamics could be corrected. The Negative Outlook reflects the uncertainty over the success of these efforts to shift the economy onto a more positive real and nominal growth path as well as the absence of more detailed reform and fiscal consolidation programme.

KEY RATING DRIVERS

The affirmation of the ratings with Negative Outlooks reflects the following key factors: Read More  

S&P Downgrades Berkshire From AA+ To AA, Outlook Negative

Obviously with Buffett a major shareholder of Moody’s, the only place where a downgrade of Berkshire could come from was S&P. Moments ago, the rating agency that dared to downgrade the US for which it is being targeted by Eric Holder’s Department of “Justice”, did just that.

On New Criteria, Berkshire Hathaway Inc. Downgraded To ‘AA’, Core Ins. Subs Affirmed At ‘AA+’, Senior Debt Rated ‘AA’

Overview

  • Under our revised group methodology criteria, we are lowering our counterparty credit rating on BRK to ‘AA’ from ‘AA+’. At the same time, we are affirming our ‘AA+’ counterparty credit and financial strength ratings on BRK’s core operating insurance companies.
  • The ratings reflect our view of the group’s excellent business risk profile and very strong financial risk profile based on an extremely strong competitive position and very strong capital and earnings.
  • The negative outlook reflects the U.S. sovereign ratings cap and our view that the group’s capital adequacy per our capital adequacy model could deteriorate relative to its risk profile.

Rating Action

On May 16, 2013, Standard & Poor’s Ratings Services lowered its counterparty  credit rating on Berkshire Hathaway Inc. (NYSE:BRK; AA/Negative/A-1+) by one  notch to ‘AA’ from ‘AA+’ and affirmed its ‘AA+’ insurance financial strength  ratings on BRK’s core subsidiaries following release of our revised Insurers  Rating and Group Rating Methodology, released on May 7, 2013. The outlook on all ratings is negative. At the same time, we assigned our ‘AA’ senior debt rating to Berkshire Hathaway Finance Corp.’s (BHFC) $1.0 billion senior 
unsecured notes. BHFC has issued the notes in two tranches: $500 million 1.3% senior unsecured notes due May 15, 2018, and $500 million 4.3% senior unsecured notes due May 15, 2043. The company used the proceeds of this issue to repay $1.0 billion of senior notes maturing on May 15, 2013. Read More