By David Oakley, Capital Markets Correspondent
Published: May 24 2009
Rich countries face a threat to their status as the safest places to invest after the
The triple A club of countries with the highest quality credit ratings has shrunk this year after Spain in January and Ireland in March were downgraded by Standard & Poor’s because of worries over their economies.
Fears have grown that other big economies, such as the US and Germany, could be in danger of downgrades after S&P’s decision to lower the UK’s credit outlook to negative from stable.
John Wraith, head of sterling rates product development at RBC Capital Markets, said: “The world is a different place now. We have seen
S&P’s decision on the
By Friday prices on 10-year gilts had fallen to their lowest in three months. However, analysts do not believe that the other triple A nations among the G7 – the
Even though the UK has a much lower debt burden than other economies, its public finances are more exposed because of the higher risks that international investors, who hold about 40 per cent of the gilts market, will be forced to sell since many are only allowed to hold triple A debt.
The OECD expects gross government debt in the
Luo Ping, of the China Banking Regulatory Commission, has said: “We could happily reduce our gilt holdings, but not US Treasuries. They are the safe haven. For everyone, including
The euro is a reserve currency, like the dollar, which means many central banks have little choice but to hold euro-denominated assets.