Loading ...Standard & Poor’s Ratings Services on October 27 announced that it had lowered its long- and short-term foreign currency sovereign credit ratings on Romania to “BB+/B” from “BBB-/A-3”, and its local currency long-term rating to “BBB-” from “BBB”. The “A-3” short-term local currency rating was affirmed. At the same time, the Transfer & Convertibility (T&C) assessment was lowered to “BBB+” from “A-”. The outlook is negative, indicating that the balance of risks is on the downside.
“The downgrade reflects the mounting risks to Romania’s real economy due to high and rising private sector leverage and the related dependency on an increasingly uncertain external financing channel,” said S&P credit analyst Marko Mrsnik. “Policy makers have not addressed these growing economic challenges,” argued the S&P analyst, pointing out that “Romania is vulnerable to a sudden-stop scenario where capital inflows dry up or even reverse, which would require a drastic real economic adjustment and bring about a substantial and sustained deterioration in the government’s balance sheet.”
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