Fitch has assigned Australia's AA plus sovereign credit rating to the guaranteed bonds being issued by Australia's big banks, arguing the rating simply reflected the high foreign debts of the banks, which were effectively a contingent liability anyway for Australia's sovereign rating. "Fitch has long held the view that the external debt obligations of Australian banks represent a contingent liability of the sovereign," said Ai Ling Ngiam, Director in Fitch's Sovereign Group. "The fact that the contingent liability is made explicit under the government guarantee scheme, which is now being attached to debts issued by the banks, does not alter our view," said Ngiam. These bank debts had restrained Australia's credit rating. At the end of 2008, Australia's net external debt is forecast at 57% of GDP, while the median for 'AAA'- rated sovereigns is 11%. Relative to current external earnings, Australia's net external debt is forecast at 222% versus the 'AAA' median of only 17%.
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