Moody’s Adjusts Bulgaria’s bond ceilings to A3 from Aa3

Moody’s Adjusts Bulgaria’s bond ceilings to A3 from Aa3

Global rating agency Moody’s said it has adjusted Bulgaria’s long-term foreign and local-currency bond ceilings to A3 from Aa3 to reflect better the country’s economic, financial, political and legal risks.
The ceiling for local-currency deposits has been adjusted to A3 from Baa2, while the foreign-currency deposit ceiling remains unchanged at Baa2, Moody’s said in a statement.
The short-term foreign-currency bond ceiling has been changed to P-2 from P-1. The short-term foreign-currency deposit ceiling remains unchanged at P-2.
Moody’s said its decision is based on the assessment of the moderate economic strength and moderate susceptibility of event risks in the country. The decision also reflects the country’s systemic risk and the default correlation between the government and private-sector borrowers.
The economy's reliance on natural resource-based exports is high but declining, which should improve the economy's stability and reduce its pro-cyclicality over time, it said, adding that in terms of the government's financial strength, debt remains very low by any standard.
“The electorate has become increasingly disgruntled with austerity measures, and voter disenchantment has been expressed through street demonstrations in recent months. Although such public pressure may slow the pace of fiscal consolidation and force early parliamentary elections, all the major parties remain committed to prudent fiscal policies,” Moody’s concluded.
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