Moody's: UK, US closer to losing AAA rating - Mon papers

The US and the UK have moved "substantially" closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody's Investors Service.

The governments of the two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly, Pierre Cailleteau, managing director of sovereign risk at Moody's in London, said in a telephone interview with Bloomberg.

Under the ratings company's baseline scenario the US will spend more on debt service as a percentage of revenue this year than any other top-rated country except the UK, and will be the biggest spender from 2011 to 2013, Moody's said today in a report.

"We expect the situation to further deteriorate in terms of the key ratings metrics before they start stabilizing," Cailleteau said.

"This story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics. Full story...

FURTHER DAMAGING revelations about the collapse of Lehman Brothers are being held up in the US courts by Barclays.

A 2,200-page examiner's report into the collapse of the 158-year old institution, published last week, uncovered in forensic detail evidence that Lehman used "balance sheet manipulation" to mislead investors and regulators, writes The Times.

It is expected to fuel a series of lawsuits that former Lehman executives and their auditors are already facing in the US courts.

The scathing report was described as "one of the most extraordinary pieces of work product I have ever encountered", by Judge James Peck, who commissioned it as part of his handling of the Lehman bankruptcy. Full story...

THE CHIEF EXECUTIVE of one of Britain's leading mutual insurers has warned the sector may be forced out of business by strict new rules from the regulator.

Chris Evans, the chief executive of MGM Advantage, said yesterday: "There has been a change in policy by the FSA, a new interpretation of policy with regard to mutuals and the products they can offer.

"This will force many mutuals to either consider merging or closing to new business and going into run-off."

Mutual life insurers are owned by their "with-profits" policyholders. Full story...

THOUSANDS OF FIRST time buyers will be priced out of the housing market if the Treasury presses ahead with plans to offer new tax breaks to buy-to-let investors, campaigners warn today.

The sharp rise in buy-to-let mortgages during the housing boom was blamed for inflating prices and creating a shortage of starter homes for people trying to get on to the property ladder, writes the Guardian.

After the Council for Mortgage Lenders (CML) reported a sharp drop in the number of first-time buyers entering the market since the credit crunch began, PricedOut, a lobby group, said the government risked exacerbating the unfair advantage already enjoyed by buy-to-let landlords. Full story...