Latest news with #R&I
Japan Times
08-07-2025
- Business
- Japan Times
Japanese agency's affirmation of top U.S. credit rating helps Hong Kong funds
For Hong Kong's pension fund managers fretting over the risk of forced divestments of U.S. Treasurys, Japan's Rating and Investment Information has some words of reassurance. The rating company, called R&I for short, reaffirmed that it will stick with its triple-A credit rating for the Treasurys, even though the three major global rating agencies have downgraded the debt, and as concerns mount that U.S. President Donald Trump's fiscal package inflates government deficit. While mostly serving domestic investors, R&I is an approved agency for Hong Kong's Mandatory Provident Fund system, and as long as it maintains the top rating for the U.S., MPF funds are allowed to invest over 10% of assets in Treasurys. "The U.S. stands alone in terms of economic power,' Kazuki Hara, 54, the head of R&I's sovereigns and international issuers department, said in an interview. "Confidence in the dollar as a key reserve currency has not been shaken.' R&I's rating has taken on increased significance recently, after Moody's Investors Service cut its U.S. rating in May, citing an increase in government debt. Fitch Ratings downgraded the U.S. in 2023, and S&P Global Ratings did so back in 2011. Trump last week signed a fiscal package and tax cuts that may add more than $3 trillion to the deficit. The International Monetary Fund has warned that this will likely complicate the task of reducing the debt burden in the coming years. Hara said he was surprised when he learned that Hong Kong's pension system uses R&I's ratings. "We only found out when the media reached out,' he said in the interview on July 1. "Frankly, it caught me off guard.' The bulk of global investors don't require the top-tier rating to invest freely in Treasurys, which helps minimize the risk of forced sales. About $2 billion would need to be divested to bring MPF assets to below the 10% limit if there were a downgrade, according to Adeline Tan, head of investments for Asia at consultancy Mercer. The MPF has more than HK$1.3 trillion ($170 billion) in assets. R&I provides sovereign ratings for 44 countries and reviews them each once a year in principle, with ad hoc evaluations if there are major developments. The company has about 180 employees. Future assessments of U.S. debt risk will hinge on fiscal credibility and trust in the dollar, Hara said. R&I considers qualitative factors such as soft power, not just fiscal data, he said.
Bloomberg
07-07-2025
- Business
- Bloomberg
Japan's R&I Helps Hong Kong Funds by Reaffirming Top US Credit Rating
For Hong Kong's pension fund managers fretting over the risk of forced divestments of US Treasuries, Japan's Rating and Investment Information Inc. has some words of reassurance. The rating company, called R&I for short, re-affirmed that it will stick with its triple-A credit rating for the US, even though the three major global agencies have downgraded the debt, and as concerns mount that President Donald Trump's fiscal package inflates the government deficit.
Yahoo
20-05-2025
- Business
- Yahoo
$166B Pension Shock? Moody's Downgrade Could Force Hong Kong to Dump US Treasuries
Hong Kong's pension giants may soon hit an uncomfortable ceiling. After Moody's (NYSE:MCO) downgraded the US credit rating last week, fund managers operating under the city's $166 billion Mandatory Provident Fund (MPF) system are warning that they could be forced to trim their Treasury holdings. Under current rules, MPF funds can only invest more than 10% of assets into a single issuerlike the US governmentif that issuer still holds a AAA rating from a list of approved agencies. With only Japan's R&I maintaining that rating, the margin for error is getting thin. Warning! GuruFocus has detected 5 Warning Signs with MCO. Behind the scenes, the Hong Kong Investment Funds Association has already flagged the issue to regulators, according to sources close to the matter. Their message? Make an exception for US Treasuries before fund managers are forced to reduce exposure. As of Q4 2024, MPF bond and mixed asset funds with US debt exposure stood at HK$484 billionnearly a third of the system. The MPFA has acknowledged the risk and said it will closely monitor developments, but no formal changes have been announced. For now, global investors can mostly ignore the noise. Most aren't bound by Hong Kong's strict AAA requirement, so they're unlikely to be sellers. Still, 30-year US yields briefly rose toward 4.90% after the downgrade, before stabilizing. If R&I wavers next, that could leave MPF funds in regulatory limboand markets might not shrug it off so easily the second time around. This article first appeared on GuruFocus.
