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SINGAPORE (Bloomberg) - Singapore's Temasek Holdings has told Standard & Poor's in 29 pages why it shouldn't mess with the state-owned investor's AAA rating.
Temasek, which managed $223 billion of assets as of last March, said the rating firm's proposed new rules for grading investment holding companies lump Singapore with riskier nations such as Greece and Jamaica, according to a Feb. 2 response to the changes. S&P's new criteria take into account the firms' lack of direct ownership of assets, the challenges they face when selling in illiquid markets and volatility of assets they hold.
Part of S&P's proposal groups Singapore, which has had a AAA rating for 20 years, alongside Greece, a nation that may run out of cash this month. While Temasek would probably still enjoy the government's top-grade overall rating, a weaker risk profile would be unwelcome at the company which has been considering offering bonds to individuals in Singapore.
"A triple-A credit rating is a rare thing in today's markets, and there is a prestige element to it," Veljko Fotak, an assistant professor of finance and managerial economics at the University at Buffalo, New York, said in a Feb. 5 e-mail. "Any chink in that armor, even if only in the stand-alone, rather than overall, rating, could have image consequences."
Temasek, which managed $223 billion of assets as of last March, said the rating firm's proposed new rules for grading investment holding companies lump Singapore with riskier nations such as Greece and Jamaica, according to a Feb. 2 response to the changes. S&P's new criteria take into account the firms' lack of direct ownership of assets, the challenges they face when selling in illiquid markets and volatility of assets they hold.
Part of S&P's proposal groups Singapore, which has had a AAA rating for 20 years, alongside Greece, a nation that may run out of cash this month. While Temasek would probably still enjoy the government's top-grade overall rating, a weaker risk profile would be unwelcome at the company which has been considering offering bonds to individuals in Singapore.
"A triple-A credit rating is a rare thing in today's markets, and there is a prestige element to it," Veljko Fotak, an assistant professor of finance and managerial economics at the University at Buffalo, New York, said in a Feb. 5 e-mail. "Any chink in that armor, even if only in the stand-alone, rather than overall, rating, could have image consequences."
