Swiss maintain highest grade on debt rating

ZURICH – Credit appraiser Moody’s on Monday kept its rating on Switzerland’s long-term debt at the highest grade, saying that large losses at its banks can be managed without out too much damage to the economy.

"The high losses among large Swiss banks and ongoing problems in the global financial markets have increased pressure on output and employment within Switzerland’s important banking and insurance sector", Moody’s said.

"However, the challenge should be manageable with no substantial macro imbalances or structural problems in the rest of the economy", the agency said as it kept Switzerland’s rating at AAA.

Moody’s also noted that the Swiss government had various options available if it needed to raise large sums of money during an emergency, for example, accessing domestic savings which are equivalent to nearly one-third of Gross Domestic Product.

In addition, the Swiss franc’s role as an international currency, as well as exchange rates with the United States, was other strengths.

"Finally, Moody’s does not rule out international support cooperation to prevent shock waves across the global financial system that a massive negative shock from the large Swiss banks may trigger, given their very international nature", it added.

Switzerland’s two biggest banks UBS and Credit Suisse lost billions of francs as a result of the US subprime or higher risk home loan crisis and its negative affects first on the global markets and now on the economy.

The state in 2008 unveiled an aid package worth almost USD 60 billion (CHF 70) to help UBS guard against its toxic assets.

[AFP / Expatica]