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The Government welcomed Moody's decision today (September 27) to upgrade Hong Kong's long-term foreign currency rating to "Aa3" from "A1", with "Positive" outlook. The Government also welcomed Moody's upgrade of Hong Kong's foreign-currency bank deposit ceiling from "A1" to "Aa3", with "Positive" outlook.
In its press statement announcing the rating decision, Moody's attributed the upgrade to Hong Kong's strong financial position and large positive international investment position, showing that Hong Kong now had a degree of resilience to any potential shocks emanating from the Mainland. In addition, Moody's noted that the large foreign assets held by Hong Kong residents could help Hong Kong weather potential economic or financial shocks. Moody's also stated that the upgrade was prompted by its belief that the foreign currency bond rating should be in line with local currency bond rating.
Welcoming the news, the Financial Secretary, Mr Henry Tang, said the upgrade reflected international recognition of Hong Kong's improved public finances and growth prospects.
"Following Moody's upgrade, Hong Kong has now achieved AA-category ratings by all major international credit rating agencies. The latest ratings are also the highest that have ever been assigned to Hong Kong. Moody's upgrade is also a major breakthrough as it has allowed Hong Kong's rating to rise above that of the Mainland by more than one notch," Mr Tang said.
"Hong Kong's foreign-currency sovereign rating has been constrained by the Mainland risk factor. In the past year, we have worked intensively on the credit rating agencies to assure them that Hong Kong is very resilient to Mainland risks. We are glad to see that the efforts are paying off. We will continue to maintain close dialogue with the credit rating agencies in order to achieve higher ratings that reflect our strong fundamentals," Mr Tang added.
Until three years ago, Moody's had capped the foreign-currency sovereign rating of Hong Kong at that of the Mainland. In October 2003, Moody's allowed Hong Kong's foreign-currency rating to pierce through the Mainland's sovereign rating to achieve "A1" and had constrained Hong Kong's rating gap to one notch above that of the Mainland since then. The latest rating action widened the gap to two notches.
Ends/Wednesday, September 27, 2006
Issued at HKT 15:23
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