Bangkok--14 Jun--Standard & Poor's
Standard & Poor's Ratings Services said today that it had affirmed its 'AA+' long-term and 'A-1+' short-term credit ratings on the Hong Kong Special Administrative Region (SAR). The outlook on the long credit ratings is stable. The transfer and convertibility (T&C) assessment on Hong Kong also remains at 'AAA'.
"The ratings on Hong Kong reflect the SAR's position as a large net external creditor, the government's accumulated fiscal reserves, and above-average growth potential for a high-income economy," said KimEng Tan, credit analyst with Standard & Poor's. "The main credit weaknesses are its reliance on volatile revenue sources and the risks associated with weaker institutions in the lower-rated People's Republic of China."
Relatively high public and private savings rates in Hong Kong have contributed to recurring current account surpluses. This remained the case in 2009 despite challenging global economic conditions, and we expect this to remain a feature of the SAR's economic profile for the foreseeable future. Over time, the current account surpluses have resulted in the accumulation of net external assets. By the end of 2010, we expect net external assets to amount to more than 270% of Hong Kong's GDP.
"The stable outlook on Hong Kong's long-term credit ratings reflects our expectations that Hong Kong will maintain its solid external position, a high degree of economic flexibility, and a healthy fiscal position, which will sustain its strong capacity to weather negative external shocks," said Mr. Tan. "It also rests on the stability in the ratings on China. An upgrade to the ratings 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 possibility also requires Hong Kong to maintain or improve its very strong economic and financial profile as well as a material improvement in China's creditworthiness. Conversely, deteriorations 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 RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers 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. Use the Ratings search box located in the left column.
Media Contact:
David Wargin, New York (1) 212.438.1579,
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Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
William Hess, Hong Kong (852) 2533 3595
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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Americas Customer Service: (1) 212-438-7280
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