Moody`s downgrades Slovenia one notch to Aa3
Baku, September 23 (AZERTAC). Moody`s Investors Service downgraded Slovenia`s government bond ratings a notch, pointing to trouble in the European nation`s corporate and financial sectors amid growing uncertainty over the government`s ability to tame its growing debt.
Moody`s now rates Slovenia at Aa3, the fourth-highest credit status. The rating is still on negative review, meaning Moody`s could decide to downgrade the country again if its situation continues to deteriorate. The ratings firm typically spends about three months reviewing countries` sovereign-debt status.
Like many of its peers in the euro zone, Slovenia`s banking sector saw its weaknesses exposed by the recent financial crisis. Moody`s cited the sector`s poor asset quality, largely inadequate capital and weak short-term external funding model for the latest downgrade.
The banking industry`s problems will also likely hit Slovenia`s corporate sector, Moody`s said, as tighter credit requirements and pressure to deleverage adds headwinds to the country`s medium-term economic growth. Growing political uncertainty is also calling the government`s ability to lower its debt trajectory into question, Moody`s added.
Slovenia still boasts a relatively low level of government and household debt, Moody`s noted. The credit rater said it will largely consider the government`s progress in meeting its fiscal targets and structural reforms during the current review. The review will also look at medium-term economic growth risks for the country`s small and very open economy.
Moody`s last moved on Slovenia`s sovereign debt in 2009, when it lowered the country`s outlook from positive to stable.
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