Bangkok--25 May--Moody's Asia Pacific
Moody's Investors Service published today the results of an examination of financial institution ratings in Asia-Pacific in light of the revision of its rating methodology for assigning foreign currency country bond ceilings.
In November 2005, Moody's published a Request for Comment, entitled "Revised Policy with Respect to Country Ceilings". Based on supportive market responses, Moody's decided to revise its methodology for assigning foreign currency country bond ceilings.
The revised methodology resulted in upgrades to the foreign currency bond ceilings of a number of countries. The higher ceilings reflect Moody's view that in many countries, even if the government were to default on its own foreign currency debt, the probability of a foreign currency moratorium is less than 100%. For a detailed discussion of Moody's new policy please refer to Moody's Rating Methodology entitled "Revised Foreign-Currency Ceilings to Better Reflect Reduced Risk of a Payments Moratorium in Wake of Government Default", published on May 24, 2006.
Most of the foreign currency debt and foreign currency issuer ratings that are now being upgraded were previously constrained at the old foreign currency debt ceilings. This constraint reflected Moody's earlier view of the risk that such obligations could be captured by a foreign currency payments moratorium in the event the government defaulted on its own foreign currency debt. Following the upgrades, a number of these ratings (those below the new foreign currency debt ceiling of the issuer's or its parent bank's domicile) are no longer constrained by this risk. Other ratings are being upgraded to the new ceiling but remain constrained by the moratorium risk still reflected in the revised ceilings.
Today's rating actions have no impact on any foreign currency deposit ratings. The revision to Moody's methodology applies only to the foreign currency ceiling for bonds and notes. Existing foreign currency country ceilings for bank deposits are not affected. Moody's foreign currency bank deposit ceilings will continue to be more directly related to government foreign currency bond ratings, reflecting the risk that a freeze on foreign currency bank deposits is more likely to be imposed in the event of a government bond default even in the absence of a generalized foreign currency moratorium.
Below is a list of affected financial institutions in the Asia-Pacific region, including the rating changes resulting from the application of the methodology. The company is listed, with the rated class of debt, the change in the rating, and the rating outlook.
For more information please contact:
Hong Kong
Wei S. Yen
Managing Director
Financial Institutions Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Singapore
Patrick Winsbury
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308