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UK Losing AAA rating...?...

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Comments

  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    purch wrote: »
    Yes it would be hard to imagine how it would work if an AAA rated institution was domiciled in a lower rated country.

    It would certainly be bizarre for the "lender of last resort" (BOE) having a lower credit rating than those borrowing from it :eek:

    could you argue that the possibility of a AA corporate default is more likely than a AA sovereign default. surely sovereign debt is more secure?
  • lostinrates
    lostinrates Posts: 55,283 Forumite
    I've been Money Tipped!
    chucky wrote: »
    could you argue that the possibility of a AA corporate default is more likely than a AA sovereign default. surely sovereign debt is more secure?

    What are the precidents? Have there been any?
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    lostinrates wrote: »
    What are the precidents? Have there been any?

    don't know if there have been any but i was thinking along the lines of collaterised debt which could have been AA rated and how it compared against a normal institution that had a AA rating.

    we all know what happened there :)
  • abaxas
    abaxas Posts: 4,141 Forumite
    chucky wrote: »
    could you argue that the possibility of a AA corporate default is more likely than a AA sovereign default. surely sovereign debt is more secure?

    I would assume the GE was more secure than the UK at the minute. Much more diverse.
  • amcluesent
    amcluesent Posts: 9,425 Forumite
    You can't buck the markets as someone once said, such as decline in GPB (would have bought 2.5 Swiss Francs two years ago, now gets you 1.7)
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    abaxas wrote: »
    I would assume the GE was more secure than the UK at the minute. Much more diverse.

    doubt it - you'd have to look at the Credit Spreads. the UK isn't as bad as you portray it
    21966.jpg
  • abaxas
    abaxas Posts: 4,141 Forumite
    chucky wrote: »
    doubt it - you'd have to look at the Credit Spreads. the UK isn't as bad as you portray it
    21966.jpg

    Here is a graph that accuratly shows the situation...

    bigmac.jpg

    Ie, who the f knows!
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    abaxas wrote: »
    Here is a graph that accuratly shows the situation...
    Ie, who the f knows!
    it was a picture Unix man - no wonder you don't have a scooby!!! ;)
  • abaxas
    abaxas Posts: 4,141 Forumite
    chucky wrote: »
    it was a picture Unix man - no wonder you don't have a scooby!!! ;)

    scrappy.jpg

    Let me at em. let me at em!
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    lostinrates wrote: »
    Didn't generali say something assuradly wise about the costs/ability of an AAA financial institution staying in an AA country?

    I did.

    It isn't possible for a company or institution to have a higher credit rating than the Government of the country it is domiciled in. As a result, there would be a cost to the UK Government losing her AAA rating.

    TBH, if it was to fall from AAA to AA then I doubt it would have a serious impact as so few companies have AAA ratings. The various offshoots of Berkshire Hathaway might have a look at whether to stay or not as they take their AAA rating extremely seriously but there would probably be an administrative way around the problem (eg make the London branch a wholly owned subsidiary of the German branch).

    The problem really comes if downgrades become more serious, like Greece, Iceland and Ireland have faced.
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