Fitch Ratings raised Hong Kong’s debt rating to its second-highest ranking, citing the city’s fiscal strength and ability to weather external shocks with reserves.
Hong Kong’s long-term international debt rating was lifted to AA+ from AA, with a stable outlook, Fitch said in a statement yesterday. The long-term local debt rating was kept at AA+ level.
Strong economic growth and the government’s “prudent fiscal management” in Hong Kong were the reasons for the upgrade, the ratings company said.
Moody’s Investors Service on Nov. 11 upgraded Hong Kong’s government bond ratings to its second-highest ranking, citing the city’s economic links to China, whose ratings were raised on the same day.
“Hong Kong has withstood the global financial crisis with its strong external financial position, solid public finances, well-regulated and capitalized banking system,” Vincent Ho (何永燊), a Hong Kong-based associate director at Fitch, said in an interview yesterday.
Hong Kong has fiscal reserves equivalent to 31 percent of its GDP and “virtually zero” public fiscal debt, Fitch said. The company estimated the city’s foreign exchange reserves will rise from US$267 billion at the end of last month to US$300 billion by the end of 2012, the release said.
The IMF said on Nov. 18 that Hong Kong runs the risk of an economic downturn due to rising asset prices and urged the city’s government to take more measures to curb the housing market.
One day later, Hong Kong announced additional taxes for homes resold within two years and increased down-payments for some mortgages.
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