The Fitch rating on Malaysia: What it really means

Schoolboy error. Really, what it means is that those guys at Fitch could get things so wrong. Just three months ago, they were telling us that, sorry guys, we are going to downgrade you [Fitch Sees More Than 50% Odds of Malaysia Downgrade on 1MDB, Bloomberg March 18]. The kind of reckless talk that hurt our ringgit and investor confidence:

Concerns Malaysia could be downgraded for the first time since the Asian financial crisis have hurt sentiment in its asset markets with the currency near the weakest in a decade. Fitch had repeatedly warned contingent liabilities such as rising debt at a state investment company [1MDB] were weighing on the rating, contributing to investors souring on the country. - Malaysia Escapes Fitch Downgrade, Bloomberg June 30

Suddenly,  they unapolegetically made a complete reversal on Malaysia's credit rating, citing "improvement in finances". Sure, of course, we believe you. But I wonder how much of Fitch's sudden reversal was influenced by the arrest of Swiss national Xavier Justo for alleged blackmailing 1MDB ex-partner Petro Saudi. 

Oh, btw, according to the Thai police, it's no longer "alleged blackmailing': Justo has admitted to the blackmailing allegation.