Singapore Awarded Top AAA Credit Rating For This Year

Source : The Straits Times, Wed, Sep 19, 2007

SINGAPORE is the only country in the Asia-Pacific region with an AAA credit rating, global ratings agency Fitch Ratings said yesterday.

After reaffirming the AAA rating for 2007 with a 'stable' outlook, Fitch senior analysts said Singapore was in strong shape despite the new economic risks faced by global and emerging markets today.

The top-notch rating is not expected to be affected by the recent volatility in capital markets, they added.

'Singapore's credit fundamentals are strong across the board,' said Mr James McCormack, Fitch's senior director and head of Asia Sovereign Ratings. 'It's a small economy, but well-diversified. There's a manufacturing centre, petrol refining sector, pharmaceutical industry.

'It's the only AAA that we have in the Asia-Pacific region... the management of public finance on the external side is exceptionally strong, we see no meaningful credit risk or credit issues.'

He was speaking here on the sidelines of the Fitch Ratings Sovereign Hotspots Asia Conference held in Singapore yesterday on the economic risks facing global and emerging markets today, particularly Asia.

Hong Kong, whose economy is more dependent on services, especially financial services, was upgraded from AA- to AA.

Fitch also forecast that Singapore will post economic growth of 7 per cent for both this year and next year.

Will the recent global credit crunch triggered by the troubled United States sub-prime mortgage market affect Singapore's future rating?

Said Mr McCormack: 'It's not going to affect the credit fundamentals, but it definitely will affect growth.

'There's no avoiding that. It's an open economy, depends on trade...and once there's a slowdown in the US, Singapore will feel the effects.'

Mr McCormack said Singapore is the third-most vulnerable economy to a global economic slowdown and continued capital market disruption in the region after Hong Kong and Sri Lanka.

Vulnerable economies are those with higher gross external financing needs, lower external liquidity and growing gross external debt. However, he added that there is 'no cause for concern' as the vulnerability is due to Singapore's open economy.

'Singapore and Hong Kong are extremely open economies, international banking centres, vulnerable to slower global economic growth...but I won't read too much into that. They're not vulnerable from a credit and ratings perspective,' he said.

'The countries in Asia we'll be concerned about are Sri Lanka, possibly South Korea...Indonesia and Thailand.'

LOOKING GOOD

'It's the only AAA that we have in the Asia-Pacific region...we see no meaningful credit risk or credit issues.'
MR MCCORMACK, on Singapore's top-notch credit rating