Benefit of the Doubt

Benefit of the Doubt

Moody's Investors Service has decided to revise its longstanding rule that limited a corporate issuer's credit rating to its country's sovereign rating. This rule existed because Moody's had assumed that governments that defaulted on their debts would inevitably impose exchange controls that prevented private-sector borrowers from servicing their foreign debts. The agency has concluded that the rule no longer makes much sense, bearing in mind that none of the governments that defaulted on their foreign debts during the emerging markets crisis of the 1990s - Ecuador, Pakistan and Ukraine - blocked hard currency debt payments by the private sector. This is a confirmation of the d

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