Bangkok--4 Oct--Standard & Poor's
Standard & Poor's today added a list of the 68 corporations and financial institutions that, on a foreign currency basis, have credit quality exceeding that of the sovereign in the country of domicile to its monthly update of transfer and convertibility (T&C) assessments. This will be a regular feature of "Transfer And Convertibility History Since November 2005," available on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com .
According to Standard & Poor's credit analyst Marie Cavanaugh, a T&C assessment is the rating associated with the probability of a sovereign restricting nonsovereign access to foreign exchange needed for debt service. "While history shows that many nonsovereign entities default around the time of a sovereign default, in recent years this infrequently has been a result of the inability of resident entities to convert local currency to foreign currency and to then transfer it to nonresidents to meet debt obligations," said Ms. Cavanaugh. "Instead, nonsovereign defaults at such times have more often been the result of currency depreciation, economic contraction, rising interest rates, liquidity constraints stemming from credit shortages, restrictions on raising utility rates and other price controls, hikes in taxes and government fees amidst cutbacks in services, delayed/partial government payments, and a deteriorating credit culture," she added.
The operating and financial characteristics of the 68 entities were tested against the most likely stress scenarios. Their higher ratings indicate that Standard & Poor's believes there is a measurable probability that these entities can meet debt obligations even when the sovereign cannot.
"In most cases, the corporate and counterparty credit ratings do not exceed the T&C assessment," noted Ms. Cavanaugh. "There are a few exceptions, at present only in Brazil. In Standard & Poor's opinion, these entities are well insulated from T&C restrictions, as well as from the other stresses outlined above," she concluded.
For more information about the methodology for rating above the sovereign, please see "Ratings Above The Sovereign: Foreign Currency Rating Criteria Update," RatingsDirect, Nov. 3, 2005. For more information about the methodology for determining T&C assessments, please see "Ratings Associated With Risk Of Foreign Exchange Controls Raised In 27 Countries," RatingsDirect, Nov. 3, 2005.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office Hotline (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4017. Members of the media may also contact the European Press Office by sending an e-mail to [email protected] .
Media Contact:
David Wargin, New York (1) 212-438-1579
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Analyst Contacts:
Marie Cavanaugh, New York (1) 212-438-7343
Laura Feinland Katz, New York (1) 212-438-7893
Blaise Ganguin, Paris (33) 1-4420-6698
Ian Thompson, Melbourne (61) 3-9631-2100
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 7,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com .
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