Only a few months ago, the Government's complaints about downgrades by the US credit ratings agencies still commanded credibility. Financial Secretary Donald Tsang Yam-kuen could point to Moody's failure to predict the Asian financial crisis as well as its unprofessional behaviour in not even bothering to listen to the Government's side of the story before issuing ratings revisions. Mr Tsang even praised rival agency Standard & Poor's as 'more professional' during one blistering attack on Moody's. So, in June, when S&P put Hong Kong's ratings on review for possible downgrade the Government was careful not to voice any criticism, because it knew the agency was only being fair in the light of the deteriorating economic environment. But when that review predictably led to yesterday's announcement of a ratings downgrade, the administration - which has become noticeably more defensive in the wake of the strong criticism of its recent share-buying spree - could not resist the temptation to lash out with an ill-judged retort. In contrast to past attacks on Moody's, the Government did not complain it was not given a chance to make representations about this regrade but rather that these were not taken 'fully into account'. In other words: S&P carefully listened to the administration's arguments against a downgrading but did not find them credible. This may infuriate senior officials. But they have only themselves to blame for a loss of credibility that can be largely attributed to their intervention on the stock and futures markets. When even the most Hong Kong-friendly of the credit ratings agencies no longer accepts the advice given by the Government, the extent of the damage done to the SAR's reputation by recent events is clear. In this instance, the consequences are not severe as Hong Kong has no sovereign debt. While top local companies are also affected by the downgrade, many have stopped borrowing or are already paying a premium price to do so. The real danger is that, if the international financial community does not trust the government on this issue, it may not do so on others. One example of where this could lead came last Friday when rumours Hong Kong would introduce Malaysian-style capital controls became so prevalent the administration was forced to issue a hasty denial. Events in Indonesia and now Malaysia have shown what can happen if a government loses its credibility with the markets. Rather than criticising S&P, Mr Tsang and his colleagues would do better to address the credibility gap that has been opened up by their actions.