MOODY's upgrades Belarus' ratings to B3 from Caa1; outlook remains stable

MOODY's Investors Service (MOODY's) on March 16, 2018 upgraded the Government of Belarus' issuer and senior unsecured ratings to B3 from Caa1. The outlook remains stable.

The upgrade of Belarus' ratings to B3 was driven primarily by the country's strengthening, albeit still weak, external liquidity position. The current account deficit has narrowed despite the economy's recovery from a two-year recession, and the excessive growth in directed lending and guarantees to state-owned banks and enterprises (SOEs) has been reined in. Moreover, the government has obtained long-term funding that will help both to mitigate the risks stemming from its significant gross external borrowing requirements and to extend its external debt maturity structure.

The stable outlook on Belarus' B3 ratings balances the country's improved economic and fiscal outlook as well as its proven willingness to pay, against its structural external vulnerability risks and weak institutional strength.

In a related move, Moody's raised Belarus' long-term country ceilings to B3 from Caa1 for foreign currency bonds; to Caa1 from Caa2 for foreign currency bank deposits; and to B2 from B3 for local currency bonds and bank deposits. The short-term foreign-currency bond and deposit ceilings remain unchanged at NP.

This is the first since 2011 Moody's upgrade of the credit rating of the Republic of Belarus. In October 2017 S&P upgraded Belarus's sovereign credit rating to B; a similar upgrade was made by FITCH in January 2018.

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