LV: Moodys upgrades Latvias rating to Baa2/Positive.

By bne IntelliNews March 18, 2013
Moodys Investors Service upgraded the government bond rating of Latvia one notch to Baa2 from Baa3, maintaining Positive outlook. Key drivers for the rating actions were strong and balanced economic recovery, positive medium-term growth prospects, significant improvement in public finances, stabilising of government debt, and expected reversal in 2014. Moodys expects all these positive drivers to continue to improve, while attributing the Positive outlook to possible Eurozone accession which will reduce risks and provide institutional support to the banking sector. Notably, Moodys believes that long-term benefits of euro adoption offset the risk of participation in euro area bailouts. Government improving its fiscal flexibility and shock absorption capacity, as well as euro adoption, could lead to positive rating actions in the future. On the other hand the Positive outlook could be removed should more limited economic growth be registered and the government fiscal policy indicates significant change. FinMin Andris Vilks and PM Valdis Dombrovskis welcomed the rating upgrade, which is going to support the government in its pursue for Eurozone accession on the background of low domestic approval rates. To remind, in November 2012 Fitch Ratings is upgrading Latvias long-term Issuers Default Rating (IDR) by one notch to BBB for foreign currency and to BBB+ for local currency, outlook on the ratings Positive. In the same month Standard & Poors announced upgrading Latvias long-term and short-term foreign and local currency rating to BBB/A-2 from BBB-/A-3, outlook on the ratings set at Positive.

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