FITCH - UK Most At Risk To Lose AAA Rating

inspector_monkfish

06:00 10Nov09 UK Most At Risk To Lose AAA Rating: Fitch - Reuters

Fitch Ratings on Tuesday said the U.K. is the most at risk among major economies of losing its AAA status, and Germany is the least, Reuters reported.

Fitch also said it would have to review its AA- rating on Japan government bonds if there is a material increase in debt issuance above the current Y44 trillion ($490 billion) next fiscal year, Reuters reported.

David Riley, co-head of global sovereign ratings at Fitch, said it is hard to see how Japan could keep JGB issuance below that level, the report said.

Riley said there was no near-term risk to the AAA rating on U.S. sovereign debt--but that status could come under pressure if the U.S. fiscal position doesn't stabilize within a couple of years, the report said.

inspector_monkfish

Cable collapsed from 1.6750 after that.... now trading at 1.6640

inspector_monkfish

07:35 10Nov09 More on Fitch's concern on UK outlook and its AAA status

While the o/n RICS and BRC surveys were much better than expected, news that [FITCH] sees the [UK] most at risk of losing its [AAA STATUS] will surely concern the markets. The agency suggests the UK fares worst among the major economies with Germany the least likely to see a downgrade to its rating in contrast.

Not surprisingly, the UK's rapidly deteriorating fiscal position is highlighted by Fitch, with recent IMF estimates projecting an 11.6% of GDP deficit this year.

While the deficit is higher in the US and f/c to reach 12.5% of national output, Fitch is more worried about the UK's position and its ability to sustain large public fiscal deficits and a level of public debt without driving up interest rates and putting Stg under (more) pressure.

Recall, [MOODY's] said the UK's ratings would not be under pressure until 2010 at least, but [S&P]'s UK outlook is negative and Fitch could follow.

inspector_monkfish

07:40 10Nov09 FITCH: UK MOST AT RISK OF LOSING AAA RATING
08:06 10Nov09 Fitch: UK Potentially Most At Risk Of Losing AAA Rating

LONDON--The U.K. government is potentially most at risk of losing its AAA rating, but its stable outlook reflects an expectation that it will announce moves to cut its debt more aggressively after an election that must be held by June of next year, Fitch Ratings said Tuesday.

The co-head of Fitch's sovereign ratings said that among large developed economies with a top credit rating, the U.K. was "potentially most at risk" of a downgrade "given that if faced the largest budget adjustment."

However, in a statement, David Riley said that the stable rating outlook Fitch assigns to the U.K. "reflected our expectation that the U.K. government will articulate a stronger fiscal consolidation program next year."

Both the governing Labour Party and the opposition Conservative Party have pledged to cut the government's debt, but most economists don't expect radical plans to be announced until after the election.

In May, Standard & Poor's Corp. assigned the U.K.'s triple-A credit rating a negative outlook, saying it would make a decision on its rating after the new government makes its intentions clear.

The U.K.'s public finances have deteriorated sharply since last autumn with the country experiencing its deepest recession in decades. Output has contracted for six straight quarters and the numbers out of work have climbed steadily since mid-2008, putting an extra toll on the public coffers.

Generali

The fallout of the UK losing her AAA would be pretty severe. Any AAA rated company would want to move their headquarters from the UK as otherwise their financing costs would rise (it's impossible for a company to have a higher credit rating than the Government of the country in which they're based).

Also, the cost of funding the national debt would rise a little (not by very much I wouldn't imagine, probably a few basis points).

It would presumably mean however that the Government would have to slash the deficit for political reasons and possibly to avoid a bond market 'strike'.

purch

the U.K. is the most at risk among major economies of losing its AAA status, and Germany is the least

What are being called the 'major economies' in this report. Are we talking G7, G8, G12 or G20 ???

Would add some perspective to the comment.

Thrugelmir

purch wrote: »

What are being called the 'major economies' in this report. Are we talking G7, G8, G12 or G20 ???

Would add some perspective to the comment.

Answer to your question.

David Riley, Fitch's co-head of global sovereign ratings, told Reuters Television in an interview that Britain's AAA rating is more at risk than that of any of the four big economies with a top rating. The other AAA countries are the United States, Germany and France. His comments sent the pound down more than a cent to $1.6616.
"It's clear that the UK's ability to sustain large public fiscal deficits and a level of public debt without driving up interest rates and without putting sterling under significant pressure is much less than in the case of the U.S," he said.
"If there was another significant fiscal stimulus package in the UK, then UK rating would be at risk."
Riley welcomed growing political consensus towards fiscal discipline ahead of a general election expected next year. Fitch's outlook on the rating is still stable
"Whichever government will come to office, we are expecting more stringent and more detailed plan for stabilising public financing. But if we don't get that after election, the UK rating is at quite significant risk."
The IMF projects Britain to run a deficit of 11.6 percent of GDP in 2009, the second biggest among G20 countries after 12.5 percent in the United States.

http://in.reuters.com/article/economicNews/idINIndia-43828120091110?pageNumber=2&virtualBrandChannel=0

purch

Answer to your question

Thanks.............

Really2

So are there only 4 AAA rated county's then?

inspector_monkfish

Really2 wrote: »

So are there only 4 AAA rated county's then?

yeah, and Essex is top

Thrugelmir

Really2 wrote: »

So are there only 4 AAA rated county's then?

Shows how important it is to the UK's financial sector.