Asia Pacific credit ratings looking positive: S&P

Asia Pacific credit ratings looking positive: S&P

Agence France-Presse, Singapore

A terrorist bomb blast in Indonesia and a military mutiny in
the Philippines have had little impact on overall credit ratings
in the Asia-Pacific region due to strong fundamentals, Standard
and Poor's (S&P) said on Wednesday.

S&P director for sovereign ratings Takahira Ogawa said
confidence in both Indonesia and the Philippines have been shaken
by the bomb attack on the JW Marriott Hotel last month and the
mutiny in Manila in July.

"The direct impact of these events, however, on the sovereign
ratings in the region were modest," Ogawa said in a preface to an
S&P report card on sovereign ratings in the region released here.

"Generally, when there is an unexpected shock -- political or
economic -- it is the strength of the macroeconomic fundamentals,
fiscal flexibility and the ability to make effective and quick
policy responses that influence the outcome from a credit
perspective," he said.

Of the 18 countries and territories rated by the U.S.-based
credit risk evaluator, three -- China, the Cook Islands and
Thailand -- have positive outlooks.

Hong Kong, India, Japan and Papua New Guinea -- have negative
outlooks while the remaining 11 have their outlooks listed as
stable.

Australia, the Cook Islands and Indonesia have had their
ratings upgraded while the Philippines has been downgraded due to
fallout from the botched coup attempt by a group of junior
military officers.

"Overall, despite the shocks and the emerging challenges in
the Philippines and Hong Kong, the Asian credit story is looking
more positive," Ogawa said.

"The unexpected strength of the U.S. and Japanese economies
will strengthen the recoveries in a number of export-led
economies in the region, reinforcing the consolidation of the
post currency crisis years."

Singapore maintained its premium triple A ratings and stable
outlook.

This reflects expectations the country's "very strong credit
standing should remain secure against almost all foreseeable
negative economic, geopolitical and security shocks over the
medium term," S and P said.

S and P analyst Chew Ping noted a recovery across the region
from the impact of Severe Acute Respiratory Syndrome (SARS)
earlier this year and acceleration in domestic demand in China,
India, Japan, Malaysia, Thailand and Taiwan, as well as continued
growth in Australia.

Good fiscal results and budgets have also been seen in
Thailand, Malaysia and Indonesia, Chew told a news briefing here,
adding he was "cautiously optimistic" about Asia-Pacific banking
systems.

But Paul Coughlin, managing director of Asia Pacific corporate
and government ratings group, said some problems were notable.

"Political risk still muddies the waters in South Korea, the
army mutiny in the Philippines highlights the widespread
institutional weaknesses of the country and it remains to be seen
if Hong Kong can stick to a coherent fiscal strategy under
intense public scrutiny," Coughlin said.

"The apparent wavering over Hong Kong's fiscal policy is in
stark contrast to the strength of Singapore's fiscal accounts and
the decisive steps to lower labor costs... to remain
competitive."