Market Overview

KBRA Assigns AA+/K1+ Ratings to the United Kingdom of Great Britain and Northern Ireland

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Kroll Bond Rating Agency Europe Limited (KBRA) assigns a AA+ issuer
ratings to the United Kingdom of Great Britain and Northern Ireland
(UK). KBRA also assigns K1+ short-term issuer ratings to the sovereign.
The long-term ratings carry a Negative Outlook. The sovereign credit
report is available here.

 
Ratings
        Rating     Outlook     Action
Foreign Currency Sovereign Rating - Long Term      

AA+*1

    Negative     Assigned
Local Currency Sovereign Rating – Long Term      

AA+*1

    Negative     Assigned
Foreign Currency Sovereign Rating – Short Term      

K1+*1

          Assigned
Local Currency Sovereign Rating – Short Term      

K1+*1

          Assigned
             

Main credit support factors:

  • The UK's large, advanced and wealthy economy benefits from very robust
    institutions and a high level of economic development.
  • Reserve currency status of sterling and the depth of the domestic
    capital markets provide the sovereign with very strong access to
    liquidity.
  • A robust government debt profile is a notable credit strength.
  • Sound economic and fiscal framework.

Main credit concerns:

  • The future direction of the UK's extensive commercial and financial
    linkages with the European Union post-Brexit are uncertain.
  • An unusual degree of political uncertainty exists as Brexit has
    created deep divisions within the government, across the political
    divide and throughout society.
  • The elevated government debt burden, with little scope for substantial
    correction, limits the government's ability to respond to economic and
    fiscal shocks.
  • Persistent current account deficits highlight excessive leverage and
    are suggestive of competitiveness pressures that may become more acute
    post-Brexit.

The sovereign ratings on the UK are supported by its large, advanced,
wealthy and globally-competitive economy and sterling's global reserve
currency status. The primary rating constraint relates to uncertainties
over the UK's economic prospects upon leaving the EU. The Negative
Outlook reflects the heightened degree of uncertainty and the
possibility that Brexit could have more severe repercussions than
currently envisaged.

The ratings are based on KBRA's Sovereigns
Rating Methodology
published on 10 May 2017. Weights used
for assigning these ratings are described in the methodology used for
this credit rating action.

Disclosures

Further disclosures relating to this rating action are available in the EU
Information Disclosure Form
. Additional information regarding
KBRA policies, methodologies, rating scales and disclosures are
available at www.kbra.com.

This is an unsolicited rating. The rated entity or related third party
did participate in the rating process and KBRA did have access to the
accounts and other relevant internal documents.

Related Publications: (available
at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

1Unsolicited where the rated entity or a related third party
did participate in the rating process
2Unsolicited where
the rated entity or a related third party did not participate in the
rating process
*With access to the accounts and other relevant
internal documents
**Without access to the accounts and other
relevant internal documents

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