Triple-A rated tripe from the ratings agencies

November 11, 2009

How the ratings agencies must love Stephen Lewis, the lugubrious economics guru from Monument Securities. He’s spotted that two views make a market, even in the whacky world of these bodies who must judge how creditworthy borrowers really are.

Lewis points out that on November 3, a Fitch analyst fretted about China’s property bubble and the risks to its banks. Six days later, rival agency Moody’s decided to raise China’s sovereign debt rating from stable to positive.

On November 6, Moody’s managing director of sovereign credit risk said that the UK was among the more resilient of the small but happy band of triple-A rated countries. Four days later, those party-poopers from Fitch warned that the UK was the most likely of them all to lose that coveted status.

It’s unlikely that the Chinese care either way, with more dollars in their reserves than they can count, but Britain is another matter. Its government is between the Scilla of spending its way out of recession and the Charybdis of keeping the confidence of its army of foreign creditors. That’s why, as Lewis adds, the Fitch warning on the UK was the comment that grabbed the headlines.

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