No sign yet of credit rating downgrade: Thailand

[webfact]

RATING
No sign yet of credit rating downgrade
Suphannee Pootpisut
The Nation

Agencies concerned about long-term effects of populist policies

BANGKOK: -- Global credit-rating agencies are maintaining their outlook on Thailand despite the political unrest, but are keeping a close watch on populist projects that could continue to drive government expenditure for the long term, according to the Finance Ministry's Public Debt Management Office.

"Although we have political problems, the rating agencies have not mentioned changes in their outlook on the country from 'positive' to 'negative'," an anonymous PDMO source said. "Therefore, there should not be talk of a credit-rating change on government bonds."

Previously, Standard & Poor's and Moody's Investors Service asked for economic information on which to evaluate their assessment of Thailand.

The source said that based on Western countries' principles, when there is a political change in a country, there can be severe impacts on its economy. However, this has not been the case for Thailand so far, as rating agencies have made no mention of downgrading their outlooks.

Earlier, some agencies suggested that if the political crisis were prolonged and affected the country's economic structure, competitiveness, investment and gross domestic product, they might downgrade Thai government bonds' credit ratings. However, if the political situation eases, that could be positive to the nation's ratings.

The source said the ratings could be affected if the political problem began to affect Thailand's competitiveness, economic growth and ability to service its debts.

However, the Thai economy is resilient to crises, including the 2006 military coup, the Asian financial crisis in 2007, and the big floods in 2011.

Expensive commitments

The source said ratings agencies were concerned over expensive commitments placing a burden on government financing, particularly populist projects like the rice-pledging programme.

Credit-rating agencies have said a core problem is Thailand's income gap, the source noted, adding that if this were not rectified, it was possible for subsequent governments to continue populist policies that led to long-term budget commitments.

The government's current debt level is 45 per cent of GDP, lower than the 60-per-cent ceiling.

Based on a PDMO study, since 1932 when Thailand's first Constitution was signed, political changes have had short-term impacts on the economy.

"The PDMO, as an agency [responsible] for the country's credit ratings, found that political changes affected the economy in the short term only. When the political situation eased, the economy picked up thereafter," the source said.


-- The Nation 2014-03-11

[Utley]

No sign yet of credit rating downgrade

I believe the operative word here is "yet".

[smedly]

Previously, Standard & Poor's and Moody's Investors Service asked for economic information on which to evaluate their assessment of Thailand.

and of course they were supplied with full and accurate accounts - I'd like to see a copy of that - what about the billions they owe to the utilities, does anyone actually think PTP is capable of honestly supplying such information accurately even if they had it, I have serious doubts

[soalbundy]

Patience, patience !!

[Phil Water]

Now let us all remember that a U.S. based agency similarly structured to this, upgraded Iceland to AAA+ and confirmed that rating just a couple of weeks before the country went broke. Honestly, rating agencies have no handle on any country's state of credit worthiness.

Edited March 11, 2014 by Phil Water

[tullynagardy]

and of course they were supplied with full and accurate accounts

You clearly have absolutely no idea how a ratings agency works.

[smedly]

and of course they were supplied with full and accurate accounts

You clearly have absolutely no idea how a ratings agency works.

I have a very clear idea how this government works

[swissie]

Previously, Standard & Poor's and Moody's Investors Service asked for economic information on which to evaluate their assessment of Thailand.

and of course they were supplied with full and accurate accounts - I'd like to see a copy of that - what about the billions they owe to the utilities, does anyone actually think PTP is capable of honestly supplying such information accurately even if they had it, I have serious doubts

Previously, Standard & Poor's and Moody's Investors Service asked for economic information on which to evaluate their assessment of Thailand.

It doesn't get any better than that.

Cheers.

[Krataiboy]

QUOTE: The . . . structured finance" used to finance subprime mortgages could not have been sold without ratings by the "Big Three" rating agencies — Moody's Investors Service, Standard & Poor's, and Fitch Ratings. - Wickipedia.

Probably not a good idea, then, to take the word of these totally discredited institutions for anything - least of all whether a rapidly-developing nation with a debt to GDP ratio twice as healthy as those of the moribund UK and the ailing empire of the United States should be downgraded!

Over the years, I have seen my adopted country survive a devastating recession, bounce back, and continue to thrive and prosper without further "help" from predatory foreign investors - be they individual sharks like George Soros, hedge fund hyenas or the international banking cartel's Trojan horse, the IMF.

Having got its claws badly burned in 1997, this Asian tiger was smart enough to bring in financial controls to limit the rapacious activities of foreign speculators. It has also prudently built up formidable foreign currency reserves.

Even in the midst of the much-publicised political upheavals of the last five months, the vibrancy of the economy remains remarkably unimpaired. The pace of development in and around the seaside town where I live is testimony to healthy growth.

All around, ambitious new development schemes are in full swing, with new roads being built to service thousands of new houses, hotels and shops. Tourism has been hit hard, we're told. Yet you would never know it, walking around this bustling resort increasingly full of foreign as well as local visitors.

Land and house prices locally have doubled in just a few years and just about every home boasts items such as a washing machine and a wide-screen TV, which were once regarded as luxuries. And is there a Thai person out of diapers who doesn't own a mobile phone or digital gizmo? Not to mention a motorcycle!

The numerous gold shops are doing a roaring trade - a clear indication of Thais' instinctive distrust of digitally-produced fiat money which could well end up, come the next crunch, worth less than the paper it is printed on. Being street wise is a big plus in a fast-growth economy.

Britain's harassed Chancellor would give his eye teeth to have Thailand's GDP growth - still projected at a healthy 3 per cent in 2014 despite a string of unforeseen setbacks, ranging from natural disasters such as the rainy season floods to the self-inflicted train-wreck of the government's disastrous rice pledging scheme.

The fall in the soar-away baht - far less dramatic than many forecast after such a sustained and impressive upward trajectory

- is far from a disaster. It will help exporters suffering the double whammy of reduced consumer demand from the austerity-hit West and China in slow-down mode.

Thailand's latest outbreak of political unrest is proving brutal both in human and financial terms, but it could have a silver lining. Whatever the political hue of the next government, it will be on a promise to end the endemic cronyism and corruption which have hitherto prevented the kingdom from fulfilling its full potential.

Talk about lighting the blue touch paper. . .

After nearly two decades as a grateful "guest" of the Land of Smiles, I have seen enough to convince me that Thailand is more than capable of outperforming most of its rivals. Hopefully, I shall be around long enough to say "I told you so."

[soalbundy]

QUOTE: The . . . structured finance" used to finance subprime mortgages could not have been sold without ratings by the "Big Three" rating agencies — Moody's Investors Service, Standard & Poor's, and Fitch Ratings. - Wickipedia.

Probably not a good idea, then, to take the word of these totally discredited institutions for anything - least of all whether a rapidly-developing nation with a debt to GDP ratio twice as healthy as those of the moribund UK and the ailing empire of the United States should be downgraded!

Over the years, I have seen my adopted country survive a devastating recession, bounce back, and continue to thrive and prosper without further "help" from predatory foreign investors - be they individual sharks like George Soros, hedge fund hyenas or the international banking cartel's Trojan horse, the IMF.

Having got its claws badly burned in 1997, this Asian tiger was smart enough to bring in financial controls to limit the rapacious activities of foreign speculators. It has also prudently built up formidable foreign currency reserves.

Even in the midst of the much-publicised political upheavals of the last five months, the vibrancy of the economy remains remarkably unimpaired. The pace of development in and around the seaside town where I live is testimony to healthy growth.

All around, ambitious new development schemes are in full swing, with new roads being built to service thousands of new houses, hotels and shops. Tourism has been hit hard, we're told. Yet you would never know it, walking around this bustling resort increasingly full of foreign as well as local visitors.

Land and house prices locally have doubled in just a few years and just about every home boasts items such as a washing machine and a wide-screen TV, which were once regarded as luxuries. And is there a Thai person out of diapers who doesn't own a mobile phone or digital gizmo? Not to mention a motorcycle!

The numerous gold shops are doing a roaring trade - a clear indication of Thais' instinctive distrust of digitally-produced fiat money which could well end up, come the next crunch, worth less than the paper it is printed on. Being street wise is a big plus in a fast-growth economy.

Britain's harassed Chancellor would give his eye teeth to have Thailand's GDP growth - still projected at a healthy 3 per cent in 2014 despite a string of unforeseen setbacks, ranging from natural disasters such as the rainy season floods to the self-inflicted train-wreck of the government's disastrous rice pledging scheme.

The fall in the soar-away baht - far less dramatic than many forecast after such a sustained and impressive upward trajectory

- is far from a disaster. It will help exporters suffering the double whammy of reduced consumer demand from the austerity-hit West and China in slow-down mode.

Thailand's latest outbreak of political unrest is proving brutal both in human and financial terms, but it could have a silver lining. Whatever the political hue of the next government, it will be on a promise to end the endemic cronyism and corruption which have hitherto prevented the kingdom from fulfilling its full potential.

Talk about lighting the blue touch paper. . .

After nearly two decades as a grateful "guest" of the Land of Smiles, I have seen enough to convince me that Thailand is more than capable of outperforming most of its rivals. Hopefully, I shall be around long enough to say "I told you so."

You've been eating those funny mushrooms again.