Bangkok--30 Jul--Moody's Investors
Moody's Investors Service says that its just-published Methodology Update on Government-Related Issuers (GRIs) has minimal ratings implications for most GRIs in Asia (ex Japan).
The update, published on July 22, replaces the Application of Joint Default Analysis to Government-Related Issuers published in April 2005.
"While the most recent publication does not constitute a change in Moody's methodology in relation to issuers owned by sovereign governments, it does outline refinements on how Moody's will henceforth disclose extraordinary government support and dependence, and offers some fine-tuning to our fundamental approach," says Chris Park, a Moody's Vice President and Senior Analyst.
"The July 22 report highlights Moody's approach in assigning ratings at par with government ratings in the absence of critical features allowing for credit substitution," says Park.
Park was speaking on the release of another new Moody's report on how the methodology update affects Moody's 38 Asian (ex Japan) rated GRIs, and of which more than half are in Korea, Singapore and Indonesia. These countries have sovereign ratings of A1, Aaa and Ba2, respectively.
The report was co-authored by Park; Philipp Lotter, a Senior Vice President; and Elizabeth Allen, a Vice President and Senior Credit Officer.
"In this context, we believe that Singapore-based port operator, PSA International (PSAI, Aaa), shows the highest vulnerability for very moderate ratings transition, given there is an extraordinary high number of rating uplift from its fundamental credit profile to have it rated at par with its shareholder (Temasek, Aaa) and some of the features of credit substitution are lacking. As a result, PSAI's ratings (and that of its wholly-owned subsidiary, PSA Corporation) are on review for possible downgrade," says Allen.
"Meanwhile, with the significant number of rated Korean GRIs, due to their very particular features, including their inextricable operational and financial alignment with the government, most baseline credit assessments in this case are already tied to the sovereign rating," says Park, adding, "Therefore, these ratings remain unchanged."
The report is entitled "Government-Related Issuers in Asia." It can be found at www.moodys.com