Wealth Intelligence Weekly 11 Nov 2019
Who's afraid of a downgrade?
The dust has now settled somewhat following the disappointing Medium Term Budget and, lo and behold, markets are mostly up. While some have attributed this to relief that Moody's decided not to downgrade the credit rating on government bonds to junk status, it's not a very convincing explanation. After all, Moody's made it clear that it needs to see concrete measures to stabilise the government's debt ratios in the February Budget. That is only three months away. A downgrade is therefore still very much on the cards. The more important question is how much should this concern investors. The short answer is that the broader context matters, but more on that later.