Moody's affirms Latvia's credit rating at current A3 level
Moody’s underpins the credit rating affirmation at high A3 level with relative resilience of the Latvian economy to the shocks caused by the Covid-19 pandemic and strong economic growth potential, moderate debt burden and strong debt affordability metrics, and the country's significant progress in tackling money laundering-related financial sector risks.
“The resilience of the Latvian economy to the shocks caused by the global pandemic and fiscal sustainability are noticed internationally, which reflects in the assessment of Latvia's creditworthiness. A high government credit rating is an important factor in maintaining investor confidence in order to promote a faster recovery of economic growth after the end of the pandemic,” notes the Minister of Finance Jānis Reirs.
The agency believes that the Covid-19 pandemic will not have a permanent and material impact on Latvia's economic growth potential. Despite a significant increase of government debt since the end of 2019, debt level is still considered as moderate and below the average level of government debt in countries with a similar credit rating. At the same time, interest payments are very low, confirming Latvia's ability to rise resources in the financial markets on favourable terms. For example, the issuance of 10-year Eurobonds in the international financial markets in March this year raised financing in the amount of 1.250 billion euros with a yield of 0.105% and fixed a coupon rate of 0.000%.
According to Moody's forecasts, despite the contraction of Latvia’s economic growth in the last year and in the first quarter of this year, overall economic growth of 3.1% is expected in 2021. Although at the beginning of the year the vaccination against Covid-19 in Latvia was slower than in the European Union member states, it has now increased, and Moody's believes that the restrictions related to Covid-19 can be expected to be eased in the second half of the year.
The previous more comprehensive publication about Latvia’s credit rating from Moody’s was published on 31 May 2019, when Latvia’s credit rating was affirmed at the current A3 level with a stable outlook.
See the full report on the Moody`s Investors Service website