Asia-Pacific Sovereign Ratings Safe, Says S&P

Standard & Poor's US credit rating downgrade will have no immediate impact on Asia-Pacific sovereign ratings, reports Channel News Asia.


"However, the US rating change, together with the weakening sovereign creditworthiness in Europe, does point to an increasingly uncertain and challenging environment ahead," says the agency in a statement.


On August 5, the credit-rating agency downgraded the US’s credit rating to 'AA+' from the highest 'AAA' rating the US has enjoyed since 1941.


The decision by S&P sparked scathing criticism from US Treasury Secretary Timothy Geithner, who called it a "terrible judgement".


The agency said its generally stable outlook for Asia-Pacific countries was supported by sound domestic demand, relatively healthy corporate and household sectors and plentiful external liquidity.


However, it listed New Zealand, Japan, Vietnam and the Cook Islands as exceptions to this.


It also warned that countries with financial systems reliant on off-shore markets may face reduced liquidity and a heightening of refinancing risk in the near term.


Nations vulnerable to disruptions in offshore capital markets were listed as Pakistan, Sri Lanka, Fiji, Australia, New Zealand, South Korea and Indonesia.


Two days after the ratings change, US Treasury Secretary Timothy Geithner said Standard & Poor showed "terrible judgement" in downgrading the US credit rating for the first time ever.


"We have a very resilient economy. We're a very strong country, and I have enormous confidence in the basic regenerative capacity of the American economy and the American people," said Geithner.


Warren Buffett also criticised Standard & Poor's downgrade of the long-term US credit rating, reports the Singapore Straits Times.


"In Omaha, the US is still triple-A. In fact, if there were a quadruple-A rating, I'd give the US that," he said, hours after the S&P cut the US credit rating from a sterling AAA to an AA+.








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