UPGRADES ALL AROUND
Moody’s changes its methodology
By Jennifer Lee

MMoody’s, the international credit-rating agency, has changed the way it sets its foreign-currency country ceilings for bonds. It cited two reasons: deepening capital markets, and the fact that governments defaulting on their foreign-currency bonds have avoided setting a general moratorium on all foreign-currency payments. Said Vincent Truglia, managing director of Moody's Sovereign Risk Unit: “We no longer automatically assume that a foreign-currency bond default by a government would be accompanied by a foreign-currency payment moratorium affecting most issuers domiciled within its borders.”

The revised methodology meant an upgrade for most of the economies Moody’s rates, and more favorable terms for borrowings by their corporates. They include eight markets in Asia, among them Hong Kong (up one notch to Aa1), India (up one notch to Baa2), Indonesia (from B1 to Ba3), and Korea (from A3 to A1). Japan and Singapore, both with top Aaa ratings, are not affected. The move also has no impact on government bond ratings or foreign-currency ceilings for bank deposits.

As a result of the higher ceilings, 15 corporations in the Asia Pacific have been upgraded, including CLP Power, Kowloon-Canton Railway, and MTR Corporation in Hong Kong, Indian Oil, several power companies and SK Telecom in Korea, URC in the Philippines, and PTT in Thailand. Nineteen financial institutions across Asia also benefited.