Moody's downgrades Armenia's government bond rating to B1

YEREVAN, MARCH 19, ARMENPRESS. Moody's Investors Service, ("Moody's") has today downgraded Armenia's long-term issuer and senior unsecured debt ratings to B1 from Ba3. “Armenpress” reports, citing the official website of the service, Moody's has changed the outlook to stable from negative.

According to Moody's, the key drivers for the downgrade to B1 are Armenia's increasing external vulnerabilities stemming from (a) declining remittances from Russia that have not yet bottomed out, (b) an uncertain outlook for foreign direct investment (FDI) inflows that collapsed in 2015 and (c) an elevated susceptibility to renewed pressures on the local currency and the country's foreign exchange reserves;

The stable outlook reflects Moody's expectation that downside and upside risks to Armenia's credit profile are broadly balanced at the new, lower rating level of B1.

In the same action, Moody's has also lowered Armenia's long-term foreign-currency deposit ceilings to B2 from B1 and the long-term local-currency bond and deposit ceilings to Ba2 from Ba1. At the same time, the long-term and short-term foreign-currency bond ceiling and the short-term foreign-currency deposit ceilings remain unchanged at Ba2/NP and NP, respectively.

It is mentioned that an increase in geopolitical risks, for instance, related to the unresolved conflict with neighboring Azerbaijan over the disputed territory of Nagorno-Karabakh could lead to downward pressures on Armenia's sovereign bond rating.