Bangkok--7 May--Standard & Poor's Although many Asian sovereigns are likely to remain resilient in this difficult environment, the risk is a few governments may lack prudence in addressing increased inflationary pressures, said Standard & Poor's Ratings Services in a report. The report, titled "When Times Call For Prudence, Will Asian Sovereigns Show It?", said that while the economies and sovereigns in the region have generally shown resilience, divergences have started to surface. "Standard & Poor's rates 17 sovereigns in Asia, and the credit outlook is still predominantly stable, with somewhat lower positive momentum due to the heightened risks," said Standard & Poor's credit analyst, Elena Okorotchenko. "The potential negative effects from U.S. housing and economic problems on Asia are becoming more obvious." They include reduced Asian exports, decline in capital flows (foreign direct investment and portfolio), credit crunch and liquidity tightening, volatile or weakening asset markets, and lower corporate profits, Ms. Okorotchenko said. At the same time, rapidly rising food prices are becoming a top concern for many governments, as further erosion of the affordability of staple foods, particularly in low per capita income economies, could lead to social tension and political instability. In pursuit of quick fixes, some governments are introducing extensive and market-distorting food price controls and export rations. To add fuel to fire, oil prices are gushing to new heights (touching a record of almost US$120 a barrel toward the end of April 2008) and are refusing to come down. "Many governments in the region are already faced with the policy dilemma of supporting high economic growth versus tackling inflation," Ms. Okorotchenko said. Indonesia is experiencing fiscal pressure due to rapidly rising fuel subsidies, while both Vietnam and Sri Lanka are going through a period of inflation of more than 20% year on year, which leads to increasing concerns about macroeconomic stability, unless more resolve is shown to tackle this quickly and effectively. Many other sovereign ratings continue to be constrained by general political and policy risks or recent political developments: Pakistan, Thailand, South Korea, Malaysia, Japan, and Taiwan--to name just a few. The report offers an update on Asian sovereigns since the previous report card was published in October 2007 from the angle of increased policy risks. 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. Members of the media may request a copy of this report by contacting the media representative provided. Media Contact: David Wargin, New York (212) 438-1579 [email protected] Analyst Contacts: Elena Okorotchenko, Singapore (65) 6239-6375 Ping Chew, Singapore (65) 6239-6345 Lisa Coory, Hong Kong (852) 2533-3520 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 8,500 employees, including wholly owned affiliates, located in 23 countries and markets, 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. Key Contacts: Americas Media Relations: (1) 212-438-6667 media_ [email protected] Americas Customer Service: (1) 212-438-7280 [email protected]