Rating Action:
Moody's downgrades Bolivia's ratings to B1, changes outlook to negative
10 Mar 2020
New York, March 10, 2020 -- -- Moody's Investors Service ("Moody's") has today downgraded the Government of Bolivia's local and foreign currency issuer and senior unsecured debt ratings to B1 from Ba3, and changed the outlook to negative, concluding the review for downgrade that was initiated on 5 December 2019.
The decision to downgrade Bolivia's ratings reflects the material erosion of the country's fiscal and foreign exchange reserve buffers in recent years. Ongoing challenges in the country's hydrocarbon sector, due to both domestic and external factors, have also reduced prospects for economic growth, government revenue generation and foreign exchange earnings. Meanwhile, heightened political risk has increased policy uncertainty and negatively impacted growth, which has exacerbated the trend decline in fiscal and foreign exchange reserve buffers.
The negative outlook signals that, following the presidential election on 3 May, the new government will likely face material sociopolitical challenges in implementing fiscal policy adjustments and structural reforms that would significantly reduce the country's fiscal and external imbalances and preserve fiscal and foreign exchange reserve buffers at current levels. If unchecked, these negative pressures will likely put further downward pressure on Bolivia's sovereign credit profile.
Concurrently, Moody's lowered Bolivia's long-term foreign currency (FC) bond ceiling to Ba3 from Ba2, its long-term FC deposit ceiling to B2 from B1, and its local currency bond and deposit ceilings to Ba2 from Ba1. The short-term foreign-currency bond ceiling and the short-term foreign-currency bank deposit ceiling remain unchanged at Not Prime (NP).
