DANISH CREDIT DOWNGRADING UNIMPORTANT - PREMIER
Prime Minister Poul Schlueter said
the downgrading of Denmark's credit rating by the U.S. Standard
and Poor's Corp was regrettable but of little practical
importance.
    3tandard and Poor's yesterday lowered the rating on Danish
long-term external debt to AA from AA-plus, saying Denmark was
less competitive with rising labour costs and this would worsen
the external account deficit and increase external debt.
    Schlueter told journalists after the weekly cabinet
meeting: "It is regrettable that they have taken a plus from us,
but the change will not have much practical significance."
    He was echoing comments by central bank governor Erik
Hoffmeyer, who was quoted by the daily Politiken as saying the
downgrading would have little effect on Denmark's borrowing
capability or the interest it paid on loans.
    But some bank economists said the lower rating would
increase the cost of national borrowing to finance the external
current account deficit, which rose to a record 34.5 billion
crowns in 1986.
    Denmark had total foreign debt of over 260 mln crowns at
the end of 1986.
    Finance Minister Palle Simonsen said in a statement last
night that the downgrading, the second in four years, should
not be over-dramatised, pointing out that the government had
already imposed a series of austerity measures to limit
consumption and was willing to act again if necessary.
    Prices fell steeply when the Danish bond market opened but
recovered somewhat after the central bank cut the overnight
money market lending rate to 10.5 pct from 11 pct.
    The bank said the cut was due to an inflow of foreign
currency in March, following stabler currency relations after
January's EMS realignment.
 REUTER
