10 November 2022
Sovereign credit ratings are integral to the running of any government and the prosperity of a country. The leading credit rating agencies are Moody's, S&P and Fitch, constantly monitoring and updating their credit ratings for individual countries. So, how well do you know your APAC country credit ratings?
Before we look at the individual sovereign credit ratings for countries in the APAC region, it is essential to understand the different rating scales for respective credit rating agencies. As well as the alphabetical ranking tags, you will also see numeric together with + and - additions. These reflect the rankings within that particular sub-sector.
The Moody’s rating scale starts at the top with Aaa, and then we have Aa, A, Baa, Ba, B, Caa, Ca and C. A country with an Aaa rating is judged to be of the highest quality with minimum risk. The C rating is the lowest-rated classification used to identify countries in default with little chance of recovery.
The highest S&P credit rating is AAA which defines a country or a company with robust capacity and able to meet its financial commitments. The lowest rating is D, defined as a speculative grade investment, usually in payment default with a limited chance of recovery. The full range of ratings is as follows AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
The Fitch credit rating scale is the same as the S&P with the addition of RD and D. The D rating is the lowest ranking issued when companies are in bankruptcy, administration or some formal winding-up procedure. Regarding countries, the C rating is more applicable, identifying a formal default or when a default process has begun.
Based on recent estimates, we have listed the top 10 APAC countries by GDP. Their rankings are as follows:-
While it will come as no surprise to learn that China has the highest credit rating across the three agencies, Japan also has a premium rating. Even though Japan has been fighting deflation for years and struggles to maintain real growth momentum, it has a high rating across the board. Australia is a country which is often underrated in economic terms and long-term growth potential. Let's not forget during the US subprime mortgage crisis, Australia was one of the few countries to avoid a full-blown recession!
It is interesting to see the public perceptions of many countries around the world in relation to their credit rating. The three agencies produce rankings without political interference or commercial prejudice. Consequently, they offer a useful indicator of country's short, medium and long-term prospects.Back to News