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Rating the UK : the B ritish government's sovereign credit ratings, 1976–8
Author(s) -
Gill David James
Publication year - 2015
Publication title -
the economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.014
H-Index - 49
eISSN - 1468-0289
pISSN - 0013-0117
DOI - 10.1111/ehr.12095
Subject(s) - scrutiny , credit rating , government (linguistics) , sovereignty , government bond , bond , economics , business , finance , financial system , political science , law , politics , linguistics , philosophy
The UK received its first sovereign credit ratings in 1978. Despite having required financial assistance from the I nternational M onetary F und only 18 months earlier, the B ritish government managed to secure ‘triple‐ A ’ ratings from both S tandard and P oor's and M oody's. B oth assessments of creditworthiness reflected improving economic conditions but also B ritish efforts to influence the sovereign ratings process. The B ank of E ngland and the T reasury sought guidance from A merican investment banks to prepare for the ratings process and then controlled the flow of information available to the rating agencies accordingly, stressing the strengths of the national economy and downplaying the weaknesses. The B ritish government subsequently launched its first bond issue in the N ew Y ork market to high levels of investor demand. Consideration of these achievements complements the historiography concerning B ritain's economic fortunes in the late 1970s. Scrutiny of events also offers a rare glimpse into the confidential sovereign ratings process. Both agencies relied on a combination of quantitative and qualitative evaluations of the UK . In addition, this article highlights the existence of a unique period in the history of sovereign credit ratings. From 1974 to 1985, the ratings industry enjoyed a cautious revival focused principally on ‘triple‐ A ’ borrowers.