MOODY'S INVESTORS SERVICE

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE

Oct 13 - 19, 2008

Moody's Investors Service is among the world's most respected and widely utilized sources for credit ratings, research and risk analysis. Moody's provides research data and an analytic tool for assessing credit risk, and publishes market leading credit opinions, deal research and commentary, serving more than 9,300 customer accounts at some 2,400 institutions around the globe. Their ratings and analysis track debt covers more than 100 sovereign nations, 12,000 corporate issuers, 29,000 public finance issuers and 96,000 structured finance obligations. Moody's maintains offices in most of the world's major financial centers and employs approximately 3,000 people worldwide, including more than 1,000 analysts. The firm also has expanded into developing markets through joint ventures or affiliation agreements with local rating agencies. Customers include a wide range of corporate and governmental issuers of securities as well as institutional investors, depositors, creditors, investment banks, commercial banks and other financial intermediaries.

LONG TERM OBLIGATION RATINGS

Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings reflect both the likelihood of default and the probability of a financial loss suffered in the event of default.

SHORT TERM TAXABLE RATINGS

Moody's short-term ratings for taxable securities are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding 13 months, unless explicitly noted.

COUNTRIES RATING BY MOODY'S INVESTORS

COUNTRY

CATEGORY

USA

Aaa toAa3 advanced countries

UK

AUSTRALIA

GREECE

ITALY

CHINA

Aaa to Aa3 developing countries

BAHRAIN

KOREA

SAUDI ARABIA

UAE

INDIA

Baa1 to Baa3 developing countries

KAZAKHISTAN

RUSSIA

EGYPT

Ba1 to Ba3 developing countries

INDONESIA

PAKISTAN

B1 to C developing countries

PHILIPPINES

Source : Moody's


LONG TERM OBLIGATION RATINGS

INVESTMENT GRADE

Aaa

Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk.

Aa1, Aa2, Aa3

Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

A1, A2, A3

Obligations rated A are considered upper-medium grade and are subject to low credit risk

Baa1, Baa2, Baa3

Obligations rated Baa are subject to moderate credit risk.

Ba1, Ba2, Ba3

Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.

B1, B2, B3

Obligations rated B are considered speculative and are subject to high credit risk.

Caa1, Caa2, Caa3

Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk.

Ca

Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

C

Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.


SHORT-TERM TAXABLE RATINGS

P-1

Issuers rated Prime-1 have a superior ability to repay short-term debt for the obligations.

P-2

Issuers rated Prime-2 have a strong ability to repay short-term debt obligations.

P-3

Issuers rated Prime-3 have an acceptable ability to repay short-term obligations.

NP

Issuers rated Not Prime do not fall within any of the Prime rating categories.

Source: Moody's Investors
WR :Withdrawn Rating, NR :Not Rated ,P :Provisional.

MOODY'S RATING IN PAKISTAN

Pakistan's credit rating was cut for the first time in nine years by Moody's Investors Service, on May 2008 which cited growing economic imbalances and renewed political difficulties. Pakistan's foreign currency sovereign rating was lowered to B2 from B1 and from B2 to C. The ratings were expected to decline as overseas investment in Pakistan, which reached a record $5.1 bn in the year 2007, has since fallen 17 %, according to central bank data. Foreign direct investment declined to $3.48 bn in the 10 months ended April 30 from $4.18 bn a year ago. The rating cut has further deter overseas investors who have already retreated from Pakistan, buying a net $119 mn of Pakistani stocks in the 10 months ended April 30, compared with purchases of $1.76 bn a year ago. Pakistan's fiscal and current account deficits surpassed 7% of gross domestic product and are heightening inflationary pressures. Substantial fiscal loosening and poor tax collection had led to sharp erosion in the fiscal position. Moody's Investors Services has also changed the outlook on the B3 long-term foreign currency deposit ratings of four Pakistani banks to negative from stable.

CONCLUSION

Credit Ratings and research help investors analyze the credit risks associated with fixed income securities. Such independent credit ratings and research also contribute to efficiencies in fixed income markets and other obligations, such as insurance policies and derivative transactions, by providing credible and independent assessments of credit risk. However, these rating agencies are often accused of showing biased ness in their opinion. Today, the world economy faces huge economic crisis which includes USA, Europe, Asia, and Africa along with other regions. Therefore, the role of Moody's Investment has become even more important and it will be interesting to see the opinion of Moody's investors, as it will be a big test for this rating agency.