Moody's may lift Hong Kong ratings

Moody's Investors Service said it has placed the A1 foreign currency bond rating of the government of Hong Kong on review for possible upgrade.

Moody's said the review was prompted primarily by the agency's belief that the foreign and domestic currency bond ratings should probably be identical, especially in jurisdictions with currency boards.

In a related action, Moody's also assigned a positive outlook to the Aa3 domestic currency government bond rating. This reflected a similar action on China's A2 foreign currency rating. The rating agency noted that Hong Kong's fiscal position has continued to strengthen.

The agency also placed Hong Kong's A1 foreign currency bank deposit ceiling on review for possible upgrade.

In addition, Moody's raised Hong Kong's local currency guideline, which is the highest rating that can be given to local currency obligations, to Aaa from Aa1, reflecting Moody's assessment that the risk of an unfavorable redenomination of the Hong Kong dollar was minimal. In conjunction with the upgrade of the guideline, the local currency deposit ceiling was also raised to Aaa from Aa1.

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