“Smart Trade Group” – UK May Lose AAA Rating…

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New York, USA, 24/5/09- ‘Smart Trade Group’: Monetary and fiscal profligacy chickens come home to roost.

“Smart Trade Group”, the Asian-based private fund, believes that it was inevitable that the UK would face the very real prospect of losing its AAA country rating in the light of its commitment to huge banking sector bailouts.

Standard and Poor’s, the credit rating agency, has downgraded Europe’s second largest economy to “negative” from “stable” because of the dire state of its public finances and crippling debt burden. Were Britain to lose its rating, it would suffer the ignominy of joining Ireland, Greece, Spain and Portugal in a group of nations seen as a credit risk.

A source close to “Smart Trade Group” suggested that such a downgrade in ratings would dent national pride since Britain was once a major economic power and sterling was the world’s reserve currency.

“Smart Trade Group” believes that a rating of AAB or AA- would see investors buying UK treasury bonds (gilt-edged securities or gilts) demanding higher yields to compensate for what the market would interpret as a increase in the likelihood of default.

“Smart Trade Group” maintains its “underweight” stance on sterling denominated assets and advises clients to avoid UK shares with the exception of selected stocks in key sectors.