Tuesday, August 5, 2008

Slovakia with Best Ratings out of V4 Countries

After Slovakia's membership in the Eurozone as of January next year was approved, and the conversion rate between local currency and Euro was set, rating agencies Fitch and Moody’s raised their ratings of Slovakia’s long-term foreign currency debt. Fitch lifted its rating from “A” to “A+” with stable outlook. “As a member of the euro area, Slovakia will be sheltered from monetary shocks and the risks of a self-fulfilling currency crisis,” justified the upgrade David Heslam, director of Fitch’s sovereign rating team. Out of Visegrád Four countries, only the Czech Republic has A+ rating (see table below). Poland has A- and Hungary BBB+. Moody’s, similarly, increased its rating outlook for Slovakia – from stable to positive. Slovak Republic’s bonds in both foreign and domestic currency have now rating of A1. The rating agency also raised the country’s foreign currency debt and deposit ceilings to 'Aaa', putting Slovakia on par with the Eurozone. The last of the three major world’s rating agencies, S&P, expressed a relative reservedness towards Prime Minister Fico’s plans in social spending and kept its ratings stable.

Sovereign Ratings of V4 Countries (long-term, in foreign currency, with outlook):

------------------Moody's --S&P ---Fitch
Slovakia ----------A1p------Ap----- A+s
Czech Republic-- A1p-------As -----A+s
Poland------------ A2s----- A-p -----A-s
Hungary---------- A2s--- BBB+n --BBB+s


Anonymous said...

Cheep Slovak workers awarded by the best rating...
This is what rating is about.

Michal Lehuta said...

:) I think the sovereign credit ratings are trying to assess the local government's ability and willingness to pay its debts, not the cost of labor..