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Moody's may raise ratings on change in country credit method

Moody's Investors Service may raise ratings on debt of 29 government-related financial institutions because of a change in how it rates governments' ability to assist these entities. Moody's will use so-called local currency deposit ceiling ratings it created earlier this month instead of countries' government bond ratings to judge the risk that a government would be unable to rescue the institutions, the credit rating company said in a statement yesterday. Governments are likely to support troubled financial institutions, including those that aren't banks, even if the government defaults on its own debt, David Fanger, Moody's New York-based chief credit officer for financial institutions, said in the statement. „Governments are motivated to do this because a failure by a major government-owned (or chartered) financial institution could negatively affect investor confidence and spill over into the commercial banking system,” Fanger said. Some east Eutopean institutions that may receive ratings increases are: Croatian Bank for Reconstruction and Development, Czech Export Bank, a.s., Hungarian Development Bank Ltd., FHB Mortgage Bank Co. Plc. (Hungary), Cassa Depositi e Prestiti S.p.A. (Italy), Eximbanka SR (Slovakia). (Bloomberg)