Posts Tagged 'moodys bulgaria'

Moody’s Affirms Bulgaria’s Credit Rating with Positive Perspective

Moody’s Investors Service has affirmed Bulgaria’s Baa3 credit rating with a positive perspective, announced the Finance Ministry.

In its assessment of Bulgaria’s current condition, Moody’s has defined the country’s state finances as average for the EU.

In January 2010, the credit rating agency changed Bulgaria’s perspective from stable to positive reflecting the sustainability of the country’s finances with respect to the effects of the global financial crisis.

Moody’s expects an economic growth of -1% for Bulgaria in 2010, and a positive growth of 2.8% in 2011. It has pointed out that expectations for a lower growth make its forecasts fro Bulgaria less optimistic.

The credit rating agency has stated that Bulgaria can hope to join the ERM II, the euro zone waiting room, in 2012 at the earliest, and might hope to adopt the euro by 2015.

The major challenges before Bulgaria appear to be its weak institutions and the high foreign debt of the private sector, which can threaten the currency board that keeps the Bulgarian lev pegged to the euro.

Bulgaria’s government is advised to continue to stick to strict fiscal policies and reforms of the public sector.

Moody’s Investors Service says Bulgaria’s growth should be recovered with the help of the EU funds, and the country’s credit rating can be improved depending on a financial consolidation that can stabilize Bulgaria’s debt burden.

Moody’s raises Bulgarian outlook to positive

Moody’s outlook on Bulgaria’s Baa3 sovereign rating has been raised from stable to positive. It’s the first positive rating action on an EU sovereign since July 2008. The positive outlook means Moody’s is considering upgrading the Bulgarian sovereign to Baa2. Such an upgrade is contingent upon the country’s ability to renew growth and weather the impact of regional shocks. “Moody’s expects the recession to end in mid-2010, although the problems in Greece will likely dampen the recovery this year,” says Kenneth Orchard, a VP in Moody’s sovereign risk group. About 9 per cent of Bulgarian exports go to Greece, and Greek companies are major investors in the country, particularly the banking sector. “The Bulgarian government’s finances were relatively resilient through the 2008-09 financial crisis,” explained Mr Orchard. “Despite a deep recession, Bulgaria will have very low budget deficits by global standards in 2009 and 2010, keeping government debt ratios low and stable.”

Financial Times January 21, 2010 10:39amby Emma Saunders

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