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?

 

Credit rating scales

 

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.

 

Moody’s credit ratings

 

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.

 

S&P credit ratings

 

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.

 

Fitch credit ratings

 

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.

 

Individual country rankings

 

Based on recent estimates, we have listed the top 10 APAC countries by GDP. Their rankings are as follows:-

 

China

 

Moody’s: A1

S&P: A+

Fitch: A+

 

Japan

 

Moody’s: A1

S&P: A+

Fitch: A

 

India

 

Moody’s: Baa3

S&P: BBB-

Fitch: BBB-

 

South Korea

 

Moody’s: Aa2

S&P: AA

Fitch: AA-

 

Australia

 

Moody’s: Aaa

S&P: AAA

Fitch: AAA

 

Indonesia

 

Moody’s: Baa2

S&P: BBB

Fitch: BBB

 

Taiwan

 

Moody’s: Aa3

S&P: AA+

Fitch: AA

 

Thailand

 

Moody’s: Baa1

S&P: BBB+

Fitch: BBB+

 

Hong Kong

 

Moody’s: Aa3

S&P: AA+

Fitch: AA-

 

Malaysia

 

Moody’s: A3

S&P: A-

Fitch: BBB+

 

Source: https://countryeconomy.com/ratings

 

Standouts from the list

 

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!

 

Summary

 

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.

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