Uncertain Future for Slovenia’s Debt
Moody’s has taken only one rating action on a eurozone sovereign in 2013, downgrading Slovenia to Ba1 from Baa2. S&P also downgraded Slovenia (to A- from A) in February 2013, but they also moved the outlooks on Ireland, Portugal and Austria to stable from negative. Italy and Slovenia were downgraded by Fitch to BBB+ in March and May 2013, respectively. Most recently in May 2013, Fitch upgraded Greece’s credit rating to B- from CCC, citing improvements to its budget and current account deficits and economic stabilisation.
In the second half of this year, Slovenia could be downgraded by S&P, but we expect the country to remain investment grade. Moody’s could move its outlook on Ireland from negative to stable. Moody’s is the only agency to rate Ireland as sub-investment grade. Eventually, Moody’s should upgrade Ireland to investment grade, but this is more likely to happen in late 2014.
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