The company has raised the country’s rating to A1 from last year’s A2 to reflect the financial obligations of local businesses to repay their debts.
Experts also said that many companies are in a better position to repay their commitments and debts.
Corporate non-payments have improved to around S$100 million per month, said Coface during its first Country Risk Conference in Singapore. This is down from last year’s S$376 million per month.
“We decided to upgrade Singapore to A1. A1 being the best in our grades, it means that Singaporean corporates are excellent among corporates. They are highly likely to repay what they owe you. Before the crisis, Singapore was already A1, it was moved to A2 and then A2+ and now A1,” said Mr Jerome Cazes, CEO of Coface.
Coface has also upgraded the rating of Japan to A1 but left Hong Kong on A2 and China on A3.
According to the company, the A3 rating on China indicated that there were still vulnerabilities among companies due to expected credit tightening by the government this year.
Coface also pointed out that risk mitigation tools among Asian companies have grown. In fact, their credit covers on Asian firms have increased 34 percent from December 2009 to S$58 billion in April 2010.
Mr. Lim Hng Kiang, Minister for Trade and Industry, said the country is poised to facilitate more risk insurance to businesses.
“Asia alone will require almost US$8 trillion in infrastructure investments over the next 10 years. Singapore can play a key role in providing political risk insurance to companies engaged in cross border investments in the region,” said Mr Lim.
“We have therefore made efforts to boost capacity and attract expertise in the underwriting of specialised risks including areas such as trade credit and political risks insurance,” he added.
Coface manages trades by covering credit in global trade deals. In ASEAN, it guarantees supplier credit of S$12.8 billion on 28,000 companies, including 8,000 firms in Singapore which accounted for S$4.6 billion.
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