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Moody's sees no threat to UK, US top rating for now

Published 12/11/2009, 02:05 AM
Updated 12/11/2009, 02:06 AM

* Test to UK, US "Aaa" rating will be next few years-Moody's

* Key will be pace of policy rate rises, debt financeability

* Sovereign credit risk remains sensitive issue for investors

HONG KONG, Dec 11 (Reuters) - The top sovereign credit ratings of Britain and the United States are not under threat of a downgrade right now, but a worst case scenario foresees a cut by 2013, analysts from Moody's Investors Service said on Friday.

The comments, which reiterated an analysis from the ratings agency released on Tuesday, helped to lift the pound to session highs.

"Only the UK and the U.S. are classified as 'resilient,' rather than 'resistant.' Their resiliency will be tested in the next couple of years, but for now they have a high degree of financeability and debt affordability," the analysts said in a presentation.

"The rise in debt and higher interest costs could test the ratings under some scenarios, but not right away."

The analysts said they did not expect either country to lose its "Aaa" rating but two risks to this view are how quickly interest rates rise over the next few years and debt financeability.

This is the ability of a government to raise a large amount of debt in its own currency without paying punitive rates.

Sovereign credit risk has become a sensitive issue for investors this week after Standard & Poor's cuts its sovereign credit rating outlook of Spain and Fitch downgraded Greece's debt rating. (Reporting by Kevin Plumberg; Editing by Jan Dahinten)

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