Tag: ratings agencies

On the Canadian housing market

On the Canadian housing market

Fitch, the ratings agency, has reversed itself on Canada. It now believes that the housing market there is poised for only modest declines at worst. Previously, Fitch had said that Canada’s housing market was well overpriced and that a major correction was a serious risk. I believe the combination of high prices and high household debt means the risk of a major correction is still there.

Full text: Moody’s upgrades Turkey’s government bond ratings to Baa3, stable outlook

Full text: Moody’s upgrades Turkey’s government bond ratings to Baa3, stable outlook

Editors note: Moody’s released the following press release yesterday in conjunction with a ratings action it took on Turkish sovereign debt. Moody’s Investors Service has today upgraded Turkey’s government bond ratings by one notch to Baa3 from Ba1, and has assigned a stable outlook. The key drivers for today’s rating action are: 1. Recent and expected future improvements in key […]

Has the UK finally lost its safe haven status?

Has the UK finally lost its safe haven status?

For domestic investors, the safe haven asset class are government liabilities if the government has substantially all liabilities in the currency it creates. For foreign investors, like domestic investors, you want to protect against default risk by investing in a currency area’s risk-free asset class but you also want to mitigate currency risk. That’s what safe haven risk is all about. The other stuff is irrelevant.

Why Moody’s downgrade of UK sovereign debt is meaningless

Why Moody’s downgrade of UK sovereign debt is meaningless

Moody’s took away the UK’s triple A rating late Friday. A ratings downgrade has long been rumored, and although the timing is always surprising, the move itself has long been anticipated. Sterling slumped on the news in thin dealings, losing a cent in about 30 minutes. When it comes to corporate ratings we can appreciate that rating agencies may have access to private information. They may also be of value in some developing countries, where information is more difficult to secure. However, when it comes to large developed countries, the rating agencies have access only to public information and it is the same information that investors use to make their decisions.