Standard & Poor's raises H.K., China credit ratings

[HenryTo]

FYI - no worries here. Conversely, S&P has kept India's rating at "junk," citing the high levels of government debt and its persistent current account deficits.
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Thursday July 27, 6:31 PM
Standard & Poor's raises H.K., China credit ratings
(Kyodo)

Standard & Poor's upgraded Hong Kong's long-term credit rating from AA- to AA with a stable rating outlook, the rating agency said in statement Thursday.

"The new rating mirrors the positive effect on Hong Kong arising from the improved credit fundamentals of China," Standard & Poor's credit analyst Kim Eng Tan said in the statement. "The higher credit rating on China reduces the likelihood of potential negative developments in China spilling over to Hong Kong and adversely affecting its credit standing."

The fundamental support for the ratings on Hong Kong remains its economic strength, the government's large net creditor position, and a large net external creditor position. Recent improvements to Hong Kong's fiscal situation, particularly in controlling expenditure, further reinforced the support, the statement said.

The firm also welcomed the recently launched consultation on introducing a goods and services tax.

Hong Kong Financial Secretary Henry Tang issued a statement on the upgrade, saying it "confirms that Hong Kong's improved fiscal position and sound economic fundamentals deserve a much higher rating."

"It is also recognition of the continued strength of China's economic performance and the overall strengthening of its creditworthiness. Hong Kong will continue to capitalize on the opportunities arising from China's rapid growth," Tang said.

The firm also raised long-term sovereign credit rating on China from A- to A, also with a stable outlook, which reflects China's "persistent efforts" to strengthen the banking sector, continuing economic liberalization and reform, improving fiscal flexibility, robust external liquidity and strong government commitment for gradual restructuring, according to credit analyst Ping Chew.