Standard and Poor's Ratings Services (S&P) and Fitch Ratings have put Thailand's sovereign credit ratings on credit watch with negative implications, following Tuesday's coup.

However, the other leading international credit rating agency, Moody's Investors Service, apparently played down the impact of the Thai coup on ratings, saying that it's a domestic political development, not a financial one. As such, there was no immediate risk of external payment problems because Thailand's credit rating depends on new government's economic policies, it said.

S&P said yesterday that it placed its "BBB+" long-term foreign rating, "A" long-term local rating, "A-2" short term foreign rating, and "A-1" short-term local currency sovereign credit ratings of Thailand on CreditWatch with negative implications.

According to Kim Eng Tan, an S&P credit analyst, the action reflected the possibility of sustained deterioration in the political situation in Thailand arising from the military coup.

Tan explained that the political uncertainties arising from the coup, with the possible postponement of an election expected in November of this year, could impair creditworthiness, although fiscal and external flexibility provide a buffer, at least in the short term.

"If prolonged political uncertainty and diminished investor confidence undermine effective decision-making and the government's economic and financial strengths, a negative outlook or a downgrade is likely," Tan said.

"A fairly rapid return to civilian rule in accordance with the country's constitution and renewed commitment to macroeconomic stability and needed reform likely would lead to the affirmation of existing ratings."

Fitch Ratings put its sovereign credit ratings for Thailand on "Rating Watch Negative" late Tuesday, but the agency said the coup might have a positive effect if it leads to a resolution of the country's long-running political crisis.

"One way to look at it is that the coup leads to a political resolution, and the economy could bounce back quickly," Fitch's Hong Kong-based head of Asian sovereign ratings James McCormack told Dow Jones Newswires.

Moody's Investors Service said the military coup should to a large extent be viewed as primarily a domestic political development, rather than as a financial development.

Any financial consequences - for example, in terms of changes to economic policies - would only materialise in time. If the coup clears the way for the scheduling of elections on a timely basis (as has been reported), then the political situation could rapidly normalise.