Standard & Poor's decision to cut Malaysia's sovereign rating last week was prompted by a change in its ratings methodology and its view on the country's creditworthiness remains unchanged, a senior analyst told Reuters today.

The agency had lowered Malaysia's local currency rating to 'A' from 'A+' on July 27.

"We define the foreign currency rating first, and then how much more the credit can notch up to the local currency rating,"

S&P's director of Asian sovereign ratings Takahira Ogawa told Reuters in an interview.

Following S&P's decision to reduce the maximum difference between a country's local and foreign currency ratings to two notches from three, the ratings agency decided to cut Malaysia's local rating to one notch above the "A-" foreign rating, he added.

"If you look at Malaysia, already 30 percent of the government (debt) securities is owned by foreigners...

"It is getting more and more difficult for us to have higher differentiation between the local and foreign currency rating," Ogawa said.

Ogawa said on Wednesday that Asia's sovereign ratings remained on an uptrend although the pace will slow due to problems in the United States and Europe that could affect the region.

- Reuters