Bangkok--1 Aug--Standard & Poor's Standard & Poor's Ratings Services said today it raised the long-term issuer credit ratings on the Hong Kong (Special Administrative Region) to 'AA+', from 'AA'. The outlook is stable. The short-term credit rating is affirmed at 'A-1+'. At the same time, the rating on the Hong Kong government's senior unsecured debt has been raised 'AA+' from 'AA'. "The rating action reflected a further improvement in the credit strength of the Chinese central government as well as the maintenance of the Hong Kong government's healthy fiscal performance," said Standard & Poor's credit analyst Kim Eng Tan. Hong Kong's very strong economic and financial attributes support the credit rating on the government. Its flexible economy and sound banking sector are expected to maintain economic growth trend at 5%. Meanwhile, fiscal reserves are estimated to be enough to cover 25 months of spending and Hong Kong's net external asset position remains strong at 97% of GDP. The main credit weaknesses are its reliance on volatile revenue sources and the risks associated with weaker institutions in lower-rated People's Republic of China. "Expectations of continued fiscal strength and stability in the ratings on China underpin the stable outlook on Hong Kong's long-term credit rating," Mr. Tan said. An upgrade to 'AAA' is possible on substantially stronger evidence that adverse credit events in the mainland will not cause an abrupt and significant deterioration in Hong Kong's creditworthiness. This also requires Hong Kong to maintain or improve its very strong economic and financial profile. Conversely, a deterioration in Hong Kong's fiscal performance or downgrade of the credit rating on China could trigger a downgrade of Hong Kong's ratings. Complete ratings information 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. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search. Media Contact: David Wargin, New York (1) 212-438-1579, [email protected] Analyst Contacts: KimEng Tan, Singapore (65) 6239-6350 Elena Okorotchenko, Singapore (65) 6239-6375