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Baltic: Negative rating action from Moody's

Fri, Nov 7 2008, 13:14 GMT
by Violeta Klyviene

Danske Bank A/S


Rating agency Moody's has cut its credit rating for Latvia and reduced its outlooks for Lithuania and Estonia from stable to negative due to rising fears of an economic slump largely on the back of the global liquidity crisis.

The negative Moody's action is obviously bad news, but is not a surprise, as all three Baltic economies have moved from double-digit growth to sharply declining growth due to the global financial crisis. Moody's stated that the negative impact on the economy would probably cause "a larger and longer-lasting impact on the government's balance sheet than previously assumed". Moody's expects Latvian government debt ratios to rise significantly over the next few years, while the Lithuanian government is not exposed to refinancing risk, as its next Eurobond does not mature until 2012. However, Moody's does not expect either of the countries to undergo a major economic crisis.

Published on  Fri, Nov 7 2008, 13:20 GMT

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

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