Moody's downgrades HK's rating to Aa3; outlook to stable

   Moody's Investors Service has downgraded the long-term issuer and senior unsecured ratings of the Government of Hong Kong to Aa3 from Aa2 and changed the outlook to stable from negative.
  The downgrade principally reflects Moody's view that Hong Kong's Institutions and Governance Strength is lower than previously estimated. The absence of tangible plans to address either the political or economic and social concerns of the Hong Kong population that have come to the fore in the past nine months may reflect weaker inherent institutional capacity than Moody's had previously assessed. It may also point to more significant constraints on the autonomy of the Special Administrative Region's (SAR) institutions than previously thought.
  The stable outlook at Aa3 reflects superior fiscal strength and consistent macroeconomic stability, which Moody's expects to persist through a period of heightened uncertainty about political and social developments associated with weak or negative GDP growth.
  Combined with the assessment that, albeit somewhat less strong, Hong Kong's institutions and governance remain markedly stronger than China's (A1 stable), these credit characteristics account for a one-notch sovereign rating gap between Hong Kong and China.
  Moody's has also downgraded the senior unsecured foreign currency ratings of the Trust Certificates issued by Hong Kong Sukuk 2015 Limited, a special purpose vehicle established by the Government of Hong Kong, to Aa3 from Aa2. The payment obligations associated with these certificates are direct obligations of the government and rank pari passu with other senior unsecured debt of the government.
  Hong Kong's long-term foreign-currency bond ceiling and the local currency bond and deposits ceilings remain unchanged at Aaa, while the long-term foreign currency deposits ceiling has been lowered to Aa3 from Aa2. Hong Kong's short-term foreign currency bond and bank deposits ceilings remain unchanged at P-1.