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Announcement:

Moody's comments on Aaa-Rated Sovereigns as Global Economic Recovery Begins

Global Credit Research - 08 Dec 2009

London, 08 December 2009 -- The global macroeconomic and financial system crises may be close to an end, but the fiscal crisis in a number of Aaa-rated countries will likely last for several years, Moody's Investors Service concludes in a new report.

Among the challenges to major Aaa-rated nations like the US, UK, France, and Germany will be the pace and sustainability of economic growth and future interest rate trends, both of which affect the countries' ability to manage the significant debt burdens they have assumed as a result of the crisis. Still, the rating agency stresses that it does not see an immediate threat to the ratings of any of the 17 nations it currently rates Aaa.

"The next year or two will show whether growth potential has been structurally eroded or whether a robust yet sustainable recovery is possible," said Pierre Cailleteau, the London-based Managing Director of Moody's Sovereign Risk group and lead author of the report, now the second in a quarterly series that was launched in September.

"Next year, Aaa governments with stretched balance sheets will find themselves under pressure to announce credible fiscal plans and -- if markets start losing patience -- to start implementing them," he said, adding, "This will complicate the recovery and test political cohesion."

As the global economy stabilizes and recovers from the recession, three of the four largest Aaa-rated countries covered in the report -- the US, France and Germany -- recorded positive growth in the third quarter, while the UK's growth declined.

"Indeed, the US and the Eurozone as a whole reported increases in real GDP, although the Eurozone's rate of increase was not impressive," Mr. Cailleteau said.

Despite the challenges, the 17 Aaa-rated countries retain the characteristics necessary for a Aaa-rating, despite having "lost altitude" in the Aaa space, he said. Chief among those characteristics is government financial strength, or the future trajectory of a government's debt and its affordability. Ireland was the only nation to have lost its Aaa rating this year.

In addition to the aforementioned four largest Aaa-rated countries, the report also contains somewhat more brief analyses of four others: Austria, Luxembourg, Switzerland, and New Zealand. The remaining Aaa-rated nations are Australia, Canada, Denmark, Finland, Netherlands, Norway, Singapore, Spain, and Sweden.

A special section at the end of the report revisits the concept of debt "financeability," i.e., the ability to raise debt without it substantially affecting the cost of the debt -- and the varying degrees to which Aaa governments are able to issue debt to meeting their financing needs.

Moody's Aaa Sovereign Monitor is available to Moody's subscribers at www.moodys.com

* * * * *

NOTE TO JOURNALISTS ONLY: For more information please contact New York Press Information +1-212-553-0376; EMEA Press Information in London +44-20-7772-5456; Juan Pablo Soriano in Madrid +34-91-310-1454; Alex Cataldo in Milan +39-02-914-81-100; Eric de Bodard in Paris +331-5330-1076; Detlef Scholz in Frankfurt +49-69-707-30-700; Mardig Haladjian in Limassol +357-25-586-586; Alex Sazhin in Moscow +7495-641-1881; Petr Vins in Prague +4202 2422 2929; Tokyo Press Information +813-5408-4110; Hilary Parkes in Toronto +1-416-214-1635; Hong Kong Press Information +852-2916-1150; Sydney Press Information +612 9270 8102; Luiz Tess in São Paulo +5511-3043-7300; Alberto Jones Tamayo in Mexico City +5255-1253-5700; Daniel Rúas in Buenos Aires +54 11-4816-2332 ext. 105; Craig Jamieson in Johannesburg +27-11-217-5470; Jehad el-Nakla in Dubai +971 4 365 0284; or visit our web site at www.moodys.com

London
Pierre Cailleteau
Managing Director
Sovereign Risk Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

New York
Steven A. Hess
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's comments on Aaa-Rated Sovereigns as Global Economic Recovery Begins
No Related Data.

 

© 2014 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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