With the ink barely dry on the contracts sealing their alliance, the 'HSBC effect' is already at work for its latest partner, the mainland's Bank of Communications (Bocom). Ratings agency Standard & Poor's said yesterday it had revised the outlook on Bocom's long-term foreign-currency counterparty credit rating to positive from stable - a move that signals a likely upgrade in the bank's rating and a lower cost of future capital raisings. S&P said it took the decision after taking into consideration recent improvements in Bocom's capital and asset quality. Aside from HSBC's 14.6 billion yuan injection to acquire its 19.9 per cent stake in the mainland's No5 lender, the agency said it also weighed the impact on Bocom's performance of the transfer of management and technical skills that will accompany the deal. The tie-up between the two banks was announced on August 6. A precedent for the latest move was set with HSBC's US$14.2 billion takeover of United States consumer finance company Household International in November 2002. At the time of the takeover, Household's debt was trading at spreads of up to 800 basis points above US treasuries - a huge premium over its traditional spreads of 100 to 200 basis points. News of the HSBC bid saw Household's spreads return to their historical premium. Analysts dubbed the impact on Household's credit rating as the 'HSBC effect'.