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waltermasoni
Caribbean Trader
Poland
Fitch Affirms Poland at 'A-'; Outlook Stable
08 JUN 2018 4:04 PM ET
Fitch Ratings-London-08 June 2018: Fitch Ratings has affirmed Poland's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A-' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
Poland's 'A-' ratings reflect its strong macro fundamentals, supported by a sound monetary framework and solid banking sector. The ratings are constrained by weak GDP per capita relative to the peer median and high albeit declining net external debt.
The general government deficit narrowed to 1.7% of GDP in 2017, from 2.3% of GDP in 2016, due to higher revenues. This reflected a combination of the strength of the economy and a structural improvement in tax collection. A deficit of 2.1% of GDP is budgeted for 2018, with spending projected to rise by 1.2% of GDP, the bulk of which is due to co-financing of EU projects. Further gains in tax compliance are planned to raise an additional 0.5% of GDP. Risks appear mixed, with the potential for further revenue outperformance balanced against spending pressures related to the electoral cycle, although the stabilising expenditure rule potentially mitigates the risk of overspending.
General government debt fell to 50.6% of GDP at end-2017, slightly above the peer median of 47.4%. The decline, from 54.2% at end-2016, was due to a combination of a fall in the state budget borrowing requirement, currency moves and strong growth in the denominator. A rising revenue base means debt/revenues, at 123.6%, is below the 'A' median of 141.6%. Zloty strength contributed to the foreign currency-denominated share of debt falling to 30.6% from 34.4% at end-2016 and the authorities plan to reduce this to the 30% objective of the 2018-2021 Public Debt Management Strategy during the year, although at this level it would still be almost twice the peer median. Fitch expects debt/GDP to fall to 49.3% at end-2019.
Real GDP growth is stronger and more stable than peers and reached a six-year high of 4.6% in 2017, supported by strong consumption stemming from a strengthening labour market and higher social payments, and rising EU-funded investment. Fitch assumes that growth reached a cyclical peak of 5.2% yoy in 1Q18 and that it will slow to 4.4% in 2018 and 3.4% in 2019. Investment will be strong in 2018, reflecting stepped up usage of EU funds, but the import intensity of this spending will put pressure on net exports, as will the slowdown in major trading partners in the EU in 2019 that Fitch is forecasting.
Cyclical strength has not resulted in clear signs of overheating in the economy. Tightness is evident in the labour market, with nominal wage growth around 7% since mid-2017 and unemployment at a long-term low, despite a significant influx of expatriate Ukrainian workers in recent years. This is not yet feeding into consumer prices (headline inflation was 1.7% in May) due to margin compression and productivity gains. However, we assume that rising inflation pressure from the labour market, combined with higher fuel prices and modest exchange rate weakness will push up inflation and is likely to prompt the central bank to tighten during 2H19, which could slow consumption growth.
A current account surplus of 0.3% of GDP was recorded in 2017, the first surplus since 1995. The improvement in the current account in recent years reflects what appears to be a structural improvement in the services balance, driven largely by the offshoring of business services from elsewhere in the EU, a trend that looks set to continue. Despite this, Fitch expects a return to a deficit, of 0.4% of GDP in 2018 and 1.1% of GDP 2019, owing to a rise in capex- and consumption-related imports.
Net external debt, at 31% of GDP at end-2017, is high relative to the 'A' median of 12.7%. Fitch expects that net FDI inflows will pick up from a long-term low of just 0.4% of GDP in 2017 and broadly cover the current account deficit, and that non-debt capital inflows in the form of EU grants will remain solid, reducing net external debt to 25% of GDP at end-2019. Non-resident holdings of local currency government debt represent over the 30% of the total, which could represent a source of vulnerability. On the other hand, intra-company debt, at 18.3% of GDP at end-2017, is accounting for a growing share of gross external debt.
Political tensions continue between Poland and the European Commission. Procedures under Article VII of the EU treaty were launched against Poland in December, following concern from the Commission about politicisation of the judiciary. The steps the government has taken to address these concerns have so far been insufficient for the Commission. Draft EU budget proposals for the next funding cycle (2021-2027) suggest a cut to Poland's allocation and a proposal to introduce of conditionality connected to the rule of law has been suggested. EU funds have played an important role in the development of the economy. However, any downside risks to their receipt would only materialise after 2021, which is beyond the current rating horizon.
Governance indicators are broadly in line with peers, but have slipped in the World Bank's assessment. Poland is entering an electoral cycle. Local elections in autumn 2018 are the first of four polls (including legislative and European) that conclude with presidential elections, which are due by August 2020. The ruling PIS party appears in a strong position.
The banking system is well capitalised (19% at end-2017), liquid and profitable. It has been resilient to shocks and its reliance on foreign funding has declined in recent years. Impaired loans to the non-financial sector were 6.8% of total gross loans in at end-2017, down from 7.1% at end-2016. In Fitch's view, risks related to administrative solutions for foreign-currency mortgages (Swiss franc loans are equivalent to 5.4% of GDP and gradually amortising) have abated and proposals being discussed would be manageable for the sector.
GDP per capita, at USD13,740, is well below the peer median of USD20,585 and convergence to the median has slowed. Income per capita on a purchasing power parity basis is closer to the peer median. The government's Strategy for Responsible Development contains a roadmap to tackle some of the structural barriers to growth, but it is still gaining traction. The role of the state in the economy has increased in recent years.
Fitch Affirms Poland at 'A-'; Outlook Stable
08 JUN 2018 4:04 PM ET
Fitch Ratings-London-08 June 2018: Fitch Ratings has affirmed Poland's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A-' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
Poland's 'A-' ratings reflect its strong macro fundamentals, supported by a sound monetary framework and solid banking sector. The ratings are constrained by weak GDP per capita relative to the peer median and high albeit declining net external debt.
The general government deficit narrowed to 1.7% of GDP in 2017, from 2.3% of GDP in 2016, due to higher revenues. This reflected a combination of the strength of the economy and a structural improvement in tax collection. A deficit of 2.1% of GDP is budgeted for 2018, with spending projected to rise by 1.2% of GDP, the bulk of which is due to co-financing of EU projects. Further gains in tax compliance are planned to raise an additional 0.5% of GDP. Risks appear mixed, with the potential for further revenue outperformance balanced against spending pressures related to the electoral cycle, although the stabilising expenditure rule potentially mitigates the risk of overspending.
General government debt fell to 50.6% of GDP at end-2017, slightly above the peer median of 47.4%. The decline, from 54.2% at end-2016, was due to a combination of a fall in the state budget borrowing requirement, currency moves and strong growth in the denominator. A rising revenue base means debt/revenues, at 123.6%, is below the 'A' median of 141.6%. Zloty strength contributed to the foreign currency-denominated share of debt falling to 30.6% from 34.4% at end-2016 and the authorities plan to reduce this to the 30% objective of the 2018-2021 Public Debt Management Strategy during the year, although at this level it would still be almost twice the peer median. Fitch expects debt/GDP to fall to 49.3% at end-2019.
Real GDP growth is stronger and more stable than peers and reached a six-year high of 4.6% in 2017, supported by strong consumption stemming from a strengthening labour market and higher social payments, and rising EU-funded investment. Fitch assumes that growth reached a cyclical peak of 5.2% yoy in 1Q18 and that it will slow to 4.4% in 2018 and 3.4% in 2019. Investment will be strong in 2018, reflecting stepped up usage of EU funds, but the import intensity of this spending will put pressure on net exports, as will the slowdown in major trading partners in the EU in 2019 that Fitch is forecasting.
Cyclical strength has not resulted in clear signs of overheating in the economy. Tightness is evident in the labour market, with nominal wage growth around 7% since mid-2017 and unemployment at a long-term low, despite a significant influx of expatriate Ukrainian workers in recent years. This is not yet feeding into consumer prices (headline inflation was 1.7% in May) due to margin compression and productivity gains. However, we assume that rising inflation pressure from the labour market, combined with higher fuel prices and modest exchange rate weakness will push up inflation and is likely to prompt the central bank to tighten during 2H19, which could slow consumption growth.
A current account surplus of 0.3% of GDP was recorded in 2017, the first surplus since 1995. The improvement in the current account in recent years reflects what appears to be a structural improvement in the services balance, driven largely by the offshoring of business services from elsewhere in the EU, a trend that looks set to continue. Despite this, Fitch expects a return to a deficit, of 0.4% of GDP in 2018 and 1.1% of GDP 2019, owing to a rise in capex- and consumption-related imports.
Net external debt, at 31% of GDP at end-2017, is high relative to the 'A' median of 12.7%. Fitch expects that net FDI inflows will pick up from a long-term low of just 0.4% of GDP in 2017 and broadly cover the current account deficit, and that non-debt capital inflows in the form of EU grants will remain solid, reducing net external debt to 25% of GDP at end-2019. Non-resident holdings of local currency government debt represent over the 30% of the total, which could represent a source of vulnerability. On the other hand, intra-company debt, at 18.3% of GDP at end-2017, is accounting for a growing share of gross external debt.
Political tensions continue between Poland and the European Commission. Procedures under Article VII of the EU treaty were launched against Poland in December, following concern from the Commission about politicisation of the judiciary. The steps the government has taken to address these concerns have so far been insufficient for the Commission. Draft EU budget proposals for the next funding cycle (2021-2027) suggest a cut to Poland's allocation and a proposal to introduce of conditionality connected to the rule of law has been suggested. EU funds have played an important role in the development of the economy. However, any downside risks to their receipt would only materialise after 2021, which is beyond the current rating horizon.
Governance indicators are broadly in line with peers, but have slipped in the World Bank's assessment. Poland is entering an electoral cycle. Local elections in autumn 2018 are the first of four polls (including legislative and European) that conclude with presidential elections, which are due by August 2020. The ruling PIS party appears in a strong position.
The banking system is well capitalised (19% at end-2017), liquid and profitable. It has been resilient to shocks and its reliance on foreign funding has declined in recent years. Impaired loans to the non-financial sector were 6.8% of total gross loans in at end-2017, down from 7.1% at end-2016. In Fitch's view, risks related to administrative solutions for foreign-currency mortgages (Swiss franc loans are equivalent to 5.4% of GDP and gradually amortising) have abated and proposals being discussed would be manageable for the sector.
GDP per capita, at USD13,740, is well below the peer median of USD20,585 and convergence to the median has slowed. Income per capita on a purchasing power parity basis is closer to the peer median. The government's Strategy for Responsible Development contains a roadmap to tackle some of the structural barriers to growth, but it is still gaining traction. The role of the state in the economy has increased in recent years.
waltermasoni
Caribbean Trader
S&P.com will be conducting routine maintenance Friday at 8pm through Sunday at 5pm, New York time. Site performance may not be optimal during this time. In addition, there may be a period of time when there will be no ratings updates. We apologize for the inconvenience and thank you for your patience.
Estonia 'AA-/A-1+' Ratings Affirmed; Outlook Stable
- 08-Jun-2018 16:22 EDT
OVERVIEW
- Estonia has the lowest debt burden in the eurozone thanks to a strong
political commitment to fiscal balance and a long track record of minimal
deficits. - Estonia's external balance sheet has returned to a modest debtor position.
- We are affirming our 'AA-/A-1+' ratings on Estonia.
- The outlook is stable.
On June 8, 2018, S&P Global Ratings affirmed its 'AA-/A-1+' long- and
short-term foreign and local currency sovereign credit ratings on Estonia. The
outlook is stable.
OUTLOOK
The stable outlook balances Estonia's strengthening credit fundamentals as its
ongoing strong economic growth sees income levels move closer to peers,
against the potential that imbalances could re-emerge, possibly undermining
this convergence.
In the longer term, we could raise our ratings on Estonia if it achieved
income levels materially closer to the eurozone average by improving
productivity and raising the importance of high value–added sectors in its
economy.
We could consider lowering the ratings if we saw certain factors increasingly
weigh on economic development. Should a credit-fueled asset price bubble or
significant external imbalances re-emerge, or persistent rapid wage growth
undermine the country's competitiveness, the ratings could come under
pressure. We could also see downward pressure on the ratings if geopolitical
or regional security risks escalate. We see such developments as very unlikely
due to Estonia's NATO membership; nonetheless, any event of that nature would
likely have severe consequences.
RATIONALE
The ratings on Estonia are supported by its strong and predictable
institutions and its membership of the eurozone. The country's economic growth
has picked up significantly recently and while we expect sustained real GDP
growth rates above 3% over our forecast horizon, Estonia's income levels
remain lower in terms of GDP per capita than most other eurozone members. On
the other hand, the country has consistently maintained a balanced fiscal
outturn, which explains Estonia's comparatively high fiscal buffers as well as
its very low gross public debt burden. The projected current account surpluses
will also lead to continued external deleveraging in the near term, after an
already significant reduction in its external indebtedness post the 2008-2009
global financial crisis.
Institutional and Economic Profile: Strong economic development over the next
few years but from a comparatively low base
- Estonia has a track record of resilient political institutions committed
to delivering solid public finances. - As a small, open economy, Estonia will remain highly exposed to
developments in its main export partners in the eurozone and Scandinavia. - Recent growth in construction does not represent a significant economic
threat compared to the pre-crisis years because growth rates will
decelerate; we also observe limited growth in capital allocation to this
sector.
long-term economic growth prospects, despite ongoing reform efforts and recent
positive developments.
waltermasoni
Caribbean Trader
Fitch Affirms Saudi Arabia at 'A+'; Outlook Stable
11 JUN 2018 7:07 AM ET
Fitch Ratings-Hong Kong/London-11 June 2018: Fitch Ratings has affirmed Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A+' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
Saudi Arabia's ratings are supported by strong fiscal and external balance sheets, including exceptionally high international reserves, low government debt, significant government assets and commitment to an extensive reform agenda. These strengths are balanced by oil dependence, weak World Bank governance indicators and elevated geopolitical risks. The fiscal break-even Brent price, which we estimate at around USD80/bbl, is higher than for many regional peers, and growth is projected to stay below the 'A' and 'AA' medians.
We expect the central government deficit to narrow only gradually, to 6.4% of GDP in 2019 (SAR180 billion), from 8.3% in 2017, as renewed growth in spending offsets sharp increases in both oil and non-oil revenue. This is under our current baseline Brent price assumption of USD57.5/bbl in 2018 and 2019, in line with Fitch's March 2018 Global Economic Outlook. The 2018 budget deficit, which we forecast at 8.4% of GDP, indicates a shift of focus from austerity towards a more growth-supportive fiscal policy, particularly when taken together with the postponement of the target year for fiscal balance to 2023 from 2020. Central government spending already rose in 2017 after two years of consecutive declines.
The immediate budgetary impact of structural non-oil revenue measures is being offset by additional spending to soften their social impact. This year started with the introduction of a 5% value added tax (VAT), a 130% hike to petrol prices, increases to household electricity tariffs as well as an increase in levies on expatriates. However, in the 2018 budget, revenue from VAT and energy price reforms will largely be offset by means-tested allowances from the new SAR32 billion Citizen's Account. The 2018 budget also earmarks SAR72 billion of central government spending for a private sector stimulus programme focused on infrastructure, SME and export financing. Another SAR50 billion stimulus package was announced shortly after the publication of the 2018 budget (to be funded by receipts from last year's anti-corruption campaign and savings elsewhere).
Amid persistent deficits, we expect that the government will continue to issue domestic and international debt and draw down on its deposits at the Saudi Arabian Monetary Authority (SAMA). We see the central government debt ratio rising to around 27% of GDP in 2019 from a little over 17% in 2017, by which time debt net of general government deposits at SAMA could turn positive. Our fiscal forecasts imply net financing needs of around SAR230 billion in 2018 and SAR180 billion in 2019.
We assume no proceeds from privatisation in 2018-19. The government's privatisation programme unveiled in April this year targets proceeds of SAR40 billion by 2020 from selling or otherwise handing over to the private sector various government assets. The IPO of a 5% stake in Saudi Aramco would be in addition to this but has been delayed until at least 2019 and in any case the authorities intend for any eventual proceeds to be transferred to the Public Investment Fund (PIF).
Saudi Arabia's current account swung to a surplus of 2.2% of GDP in 2017 from a deficit of 3.7% in 2016 as a result of a bounce back of hydrocarbon receipts and continued compression of merchandise imports. However, SAMA reserves still fell as a result of capital outflows (partly related to PIF investments abroad). We expect SAMA reserves to fall by a further USD22 billion in 2018 and USD11 billion in 2019, amid continued capital outflows and a narrowing of the current account surplus (reflecting recovery in domestic demand, capital spending and imports). This takes into account some support for the capital account from a gradual pick-up in inward FDI (from a low of USD1.4 billion in 2017) and inward portfolio equity investment (related to Saudi Arabia's inclusion in major equity indices).
If Brent averages USD70/bbl (as it has year to date), assuming no further increases in spending beyond what we forecast, the central government deficit could be 4.1% of GDP in 2018, the financing requirement would shrink by more than 50%, government drawdowns from SAMA would become unnecessary and 2018 could see a build-up of SAMA foreign reserves to the tune of USD16 billion. SAMA net foreign assets have already increased by USD9 billion in the first four months of 2018.
We expect a pick-up of growth to 1.8% in 2018 and 1.9% in 2019. The fiscal expansion will accelerate non-oil growth, although, in our view, it is still likely to be held back by elevated domestic uncertainty and uncertainty over the regional environment (tensions with Iran and the war in Yemen). Real GDP contracted 0.7% in 2017 on the back of a 4.8% decline in crude output (in excess of Saudi Arabia's commitment to OPEC but offset somewhat by higher refining activity). Non-oil GDP grew 1% (up from no growth in 2016), likely helped by the clearance of arrears in the private sector and generally improved confidence as a result of higher oil prices. Structural reforms under the Vision 2030 programme could boost growth over the medium term.
In our view, political risks are elevated compared with peers and historical norms, due to Saudi Arabia's prominent role in a volatile region, the country's increasingly assertive stance in foreign affairs and the rapid pace of political and social change domestically. In particular, tensions between Saudi Arabia and Iran have increased over Yemen, Iran's nuclear programme and its influence across the region. There is a growing risk, albeit still small, that these tensions could escalate into a more direct conflict between Saudi Arabia and Iran. Houthi missile attacks from Yemen into Saudi Arabia, which Saudi Arabia believes are being supported by Iran, have increased in frequency and range. Even in the absence of interstate conflict, an expansion of the military campaign in Yemen would entail significant fiscal and economic costs.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Saudi Arabia a score equivalent to a rating of 'A-' on the Long-Term Foreign-Currency (LTFC) IDR scale.
Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to rated peers, as follows:
- Public finances: +1 notch, to reflect the large government deposits held with SAMA as well as other government assets.
- External finances: +1 notch, to reflect the large size of sovereign net foreign assets, largely held as international reserves and the strong net external creditor position.
11 JUN 2018 7:07 AM ET
Fitch Ratings-Hong Kong/London-11 June 2018: Fitch Ratings has affirmed Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A+' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
Saudi Arabia's ratings are supported by strong fiscal and external balance sheets, including exceptionally high international reserves, low government debt, significant government assets and commitment to an extensive reform agenda. These strengths are balanced by oil dependence, weak World Bank governance indicators and elevated geopolitical risks. The fiscal break-even Brent price, which we estimate at around USD80/bbl, is higher than for many regional peers, and growth is projected to stay below the 'A' and 'AA' medians.
We expect the central government deficit to narrow only gradually, to 6.4% of GDP in 2019 (SAR180 billion), from 8.3% in 2017, as renewed growth in spending offsets sharp increases in both oil and non-oil revenue. This is under our current baseline Brent price assumption of USD57.5/bbl in 2018 and 2019, in line with Fitch's March 2018 Global Economic Outlook. The 2018 budget deficit, which we forecast at 8.4% of GDP, indicates a shift of focus from austerity towards a more growth-supportive fiscal policy, particularly when taken together with the postponement of the target year for fiscal balance to 2023 from 2020. Central government spending already rose in 2017 after two years of consecutive declines.
The immediate budgetary impact of structural non-oil revenue measures is being offset by additional spending to soften their social impact. This year started with the introduction of a 5% value added tax (VAT), a 130% hike to petrol prices, increases to household electricity tariffs as well as an increase in levies on expatriates. However, in the 2018 budget, revenue from VAT and energy price reforms will largely be offset by means-tested allowances from the new SAR32 billion Citizen's Account. The 2018 budget also earmarks SAR72 billion of central government spending for a private sector stimulus programme focused on infrastructure, SME and export financing. Another SAR50 billion stimulus package was announced shortly after the publication of the 2018 budget (to be funded by receipts from last year's anti-corruption campaign and savings elsewhere).
Amid persistent deficits, we expect that the government will continue to issue domestic and international debt and draw down on its deposits at the Saudi Arabian Monetary Authority (SAMA). We see the central government debt ratio rising to around 27% of GDP in 2019 from a little over 17% in 2017, by which time debt net of general government deposits at SAMA could turn positive. Our fiscal forecasts imply net financing needs of around SAR230 billion in 2018 and SAR180 billion in 2019.
We assume no proceeds from privatisation in 2018-19. The government's privatisation programme unveiled in April this year targets proceeds of SAR40 billion by 2020 from selling or otherwise handing over to the private sector various government assets. The IPO of a 5% stake in Saudi Aramco would be in addition to this but has been delayed until at least 2019 and in any case the authorities intend for any eventual proceeds to be transferred to the Public Investment Fund (PIF).
Saudi Arabia's current account swung to a surplus of 2.2% of GDP in 2017 from a deficit of 3.7% in 2016 as a result of a bounce back of hydrocarbon receipts and continued compression of merchandise imports. However, SAMA reserves still fell as a result of capital outflows (partly related to PIF investments abroad). We expect SAMA reserves to fall by a further USD22 billion in 2018 and USD11 billion in 2019, amid continued capital outflows and a narrowing of the current account surplus (reflecting recovery in domestic demand, capital spending and imports). This takes into account some support for the capital account from a gradual pick-up in inward FDI (from a low of USD1.4 billion in 2017) and inward portfolio equity investment (related to Saudi Arabia's inclusion in major equity indices).
If Brent averages USD70/bbl (as it has year to date), assuming no further increases in spending beyond what we forecast, the central government deficit could be 4.1% of GDP in 2018, the financing requirement would shrink by more than 50%, government drawdowns from SAMA would become unnecessary and 2018 could see a build-up of SAMA foreign reserves to the tune of USD16 billion. SAMA net foreign assets have already increased by USD9 billion in the first four months of 2018.
We expect a pick-up of growth to 1.8% in 2018 and 1.9% in 2019. The fiscal expansion will accelerate non-oil growth, although, in our view, it is still likely to be held back by elevated domestic uncertainty and uncertainty over the regional environment (tensions with Iran and the war in Yemen). Real GDP contracted 0.7% in 2017 on the back of a 4.8% decline in crude output (in excess of Saudi Arabia's commitment to OPEC but offset somewhat by higher refining activity). Non-oil GDP grew 1% (up from no growth in 2016), likely helped by the clearance of arrears in the private sector and generally improved confidence as a result of higher oil prices. Structural reforms under the Vision 2030 programme could boost growth over the medium term.
In our view, political risks are elevated compared with peers and historical norms, due to Saudi Arabia's prominent role in a volatile region, the country's increasingly assertive stance in foreign affairs and the rapid pace of political and social change domestically. In particular, tensions between Saudi Arabia and Iran have increased over Yemen, Iran's nuclear programme and its influence across the region. There is a growing risk, albeit still small, that these tensions could escalate into a more direct conflict between Saudi Arabia and Iran. Houthi missile attacks from Yemen into Saudi Arabia, which Saudi Arabia believes are being supported by Iran, have increased in frequency and range. Even in the absence of interstate conflict, an expansion of the military campaign in Yemen would entail significant fiscal and economic costs.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Saudi Arabia a score equivalent to a rating of 'A-' on the Long-Term Foreign-Currency (LTFC) IDR scale.
Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to rated peers, as follows:
- Public finances: +1 notch, to reflect the large government deposits held with SAMA as well as other government assets.
- External finances: +1 notch, to reflect the large size of sovereign net foreign assets, largely held as international reserves and the strong net external creditor position.
Che vergogna!!! L’Italia è BBB .... forse
S&P.com will be conducting routine maintenance Friday at 8pm through Sunday at 5pm, New York time. Site performance may not be optimal during this time. In addition, there may be a period of time when there will be no ratings updates. We apologize for the inconvenience and thank you for your patience.
Estonia 'AA-/A-1+' Ratings Affirmed; Outlook Stable
View Analyst Contact Information
- 08-Jun-2018 16:22 EDT
OVERVIEW
RATING ACTION
- Estonia has the lowest debt burden in the eurozone thanks to a strong
political commitment to fiscal balance and a long track record of minimal
deficits.- Estonia's external balance sheet has returned to a modest debtor position.
- We are affirming our 'AA-/A-1+' ratings on Estonia.
- The outlook is stable.
On June 8, 2018, S&P Global Ratings affirmed its 'AA-/A-1+' long- and
short-term foreign and local currency sovereign credit ratings on Estonia. The
outlook is stable.
OUTLOOK
The stable outlook balances Estonia's strengthening credit fundamentals as its
ongoing strong economic growth sees income levels move closer to peers,
against the potential that imbalances could re-emerge, possibly undermining
this convergence.
In the longer term, we could raise our ratings on Estonia if it achieved
income levels materially closer to the eurozone average by improving
productivity and raising the importance of high value–added sectors in its
economy.
We could consider lowering the ratings if we saw certain factors increasingly
weigh on economic development. Should a credit-fueled asset price bubble or
significant external imbalances re-emerge, or persistent rapid wage growth
undermine the country's competitiveness, the ratings could come under
pressure. We could also see downward pressure on the ratings if geopolitical
or regional security risks escalate. We see such developments as very unlikely
due to Estonia's NATO membership; nonetheless, any event of that nature would
likely have severe consequences.
RATIONALE
The ratings on Estonia are supported by its strong and predictable
institutions and its membership of the eurozone. The country's economic growth
has picked up significantly recently and while we expect sustained real GDP
growth rates above 3% over our forecast horizon, Estonia's income levels
remain lower in terms of GDP per capita than most other eurozone members. On
the other hand, the country has consistently maintained a balanced fiscal
outturn, which explains Estonia's comparatively high fiscal buffers as well as
its very low gross public debt burden. The projected current account surpluses
will also lead to continued external deleveraging in the near term, after an
already significant reduction in its external indebtedness post the 2008-2009
global financial crisis.
Institutional and Economic Profile: Strong economic development over the next
few years but from a comparatively low base
The Estonian labor market remains a primary constraint to medium- and
- Estonia has a track record of resilient political institutions committed
to delivering solid public finances.- As a small, open economy, Estonia will remain highly exposed to
developments in its main export partners in the eurozone and Scandinavia.- Recent growth in construction does not represent a significant economic
threat compared to the pre-crisis years because growth rates will
decelerate; we also observe limited growth in capital allocation to this
sector.
long-term economic growth prospects, despite ongoing reform efforts and recent
positive developments.
waltermasoni
Caribbean Trader
A breve secondo me si verificherà il forse
waltermasoni
Caribbean Trader
Walter ho letto che di là ti hanno "ripreso" perchè segnali titoli OTC !!!
Che ti devo dire? Per loro il mondo dollari e’ il tlx !
Ti rendi conto che comprano le subordinate della banca popolare di navacchio su himtf e poi se posti un obbligazione magari di bank of America ti dicono che fanno fatica a seguire ...
