So, Fitch, the third of the big three sovereign credit ratings agencies, has moved the Government’s rating from a stable outlook to a negative outlook.
Does this mean that John Key will be admitting that he has delivered a credit downgrade, like he was boasting of an upgrade when S&P (another of the big 3) moved us from negative to stable?
Does this mean that journalists will be reporting that we have received “an effective downgrade”
You’re just the ones I could find easily. Nearly every journo repeated this Nat spin about an upgrade. Logically, they must report a downgrade now.
merelyWhat’s the bet the journos don’t mention it or try to say (on the basis of nothing) that Fitch doesn’t count, only S&P does?
The fact of the matter (and I know it’s annoying those things get involved) is that a change in rating outlook is not a change in rating – it is not an upgrade or downgrade, it is an indicator of the possibility of a future upgrade or downgrade. Furthermore, a ratings agency changing its rating for a country does not automatically change the cost of borrowing for that country – it is merely more information for the market, which has usually predicted it.
Is this outlook change unwelcome? Yes, and unexpected. The dollar fell on the announcement. Does it mean we’re going to be facing a higher cost of borrowing in the future? Unlikely. Is it a credit downgrade? No, no, and, one more time, no. It’s no more a downgrade than S&P moving us from negative to stable in May was an upgrade.
Of course, The Standard has been trying to get these simple facts through to the media all along. I’m deluding myself to think they’ll suddenly listen. Except, oh right, before they were getting it wrong in a way that favoured National. If they get it right now, the Nats don’t look so bad.
[Update: Watkins does the trifecta – Fitch is “a less influential rating agency than some” (print version only), it only “revised” our “outlook”, but S&P still “upgraded” us in May.]