Asean is one of the few regions of the world where the talk is not of downgrades but of upgrades. Mostly, this is about Indonesia, where all three international rating agencies have Indonesia just one notch below investment grade, with a positive outlook; most analysts expect Indonesia to be upgraded by at least one of them by the end of the year (the smart money’s on Fitch), and probably all three within 12 months or so. The Philippines, too, is on the right track, with finance secretary Cesar Purisima on a personal crusade to get a ratings upgrade (the country is BB+ at Fitch, one notch lower elsewhere) in recognition of the undeniably impressive reductions being made to the budget deficit. "As our debt-to-GDP goes down, it creates more fiscal space for additional investment," says Purisima. "When you do that, you get into a more virtuous circle. Our hope is that will be rewarded with an upgrade to investment grade: the market is already rewarding us by allowing us to borrow at close to investment-grade prices. Our CDS prices are tighter in some cases than our friends in Indonesia."
But there is another question about sovereign ratings in Asia: have they been getting a raw deal?
One person who is certain they have is Dato’ Lee Kok Kwan, deputy chief executive of CIMB.
