By Shamim Adam Dec. 11 (Bloomberg) — Moody’s Investors Service said it has no current plans to lower its top debt ratings on the U.S. and the U.K. after a report this week stated the sovereigns may “test the Aaa boundaries.” “The outlook is stable” for the two countries, Moody’s Senior Vice President Tom Byrne said in an interview in Singapore today. Byrne was citing comments by Steven Hess , vice president and senior credit officer of the sovereign ratings group for the company, made in a teleconference today. The pound rose the most in a week against the yen and the dollar after Dow Jones reported that Moody’s has no plans to revise the ratings for the U.S. and the U.K. The British currency gained 0.7 percent to 144.56 yen, and advanced 0.1 percent to $1.6292. Bonds from Dubai to Greece have tumbled in the past two weeks on concerns that some governments and companies will struggle to patch up their finances after the worst global recession since World War II. Spain had the outlook on its debt grade lowered by Standard & Poor’s on Dec. 9 as its public finances worsen, one day after Greece’s government bonds tumbled following a downgrade by Fitch Ratings. Moody’s analysts, in a Dec. 8 report, said public finances in the U.S. and the U.K. are worsening in the wake of the global financial crisis and the sovereigns may “test the Aaa boundaries.” It said the U.S. and U.K. have “resilient” Aaa ratings, as opposed to the “resistant” top ratings of Canada, Germany and France. Debt Affordability “Their resiliency will be tested in the next couple of years but for now they have a high degree of ‘financeability ‘ and debt affordability,” Hess said in a presentation prepared for the teleconference today. “The rise in debt and higher interest costs could test ratings under some scenarios but not right away.” Moody’s defines “resilient” countries as “Aaa countries whose public finances are deteriorating considerably and may therefore test the Aaa boundaries, but which display, in our opinion, an adequate reaction capacity to rise to the challenging and rebound.” Resistant countries are ones which started the crisis from a robust financial position and aren’t undergoing lasting changes to their economic models, according to Moody’s. The credit rating on Greece’s government bonds was cut to BBB+ from A- by Fitch Ratings on Dec. 8. The company also downgraded five Greek banks the same day. Dubai last month shook investor confidence after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001. Dubai World, a state- owned holding company, said Nov. 25 it would seek a “standstill” agreement with creditors and an extension of all loan maturities until at least May 30, 2010. To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net
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Moody’s Has No Plans to Cut U.S., U.K. Ratings, Outlook Stable, Byrne Says
