 People hold a Tunisian flag during a protest in Tunis on Jan. 18, 2011. Moody’s Investors Service cuts Tunisia's local and foreign currency government bond ratings, while other rating agencies may take similar steps soon. AFP photo |
Tunisia had its local and foreign currency government bond ratings downgraded by Moody’s Investors Service after a deadly wave of riots that ousted President Zine El Abidine Ben Ali.
Moody’s downgraded the bonds to Baa3, the lowest investment-grade rating, from Baa2 and changed the outlook to negative from stable, signaling the next move may be another
cut to junk status. The service also downgraded the government’s foreign currency bond ceiling to Baa1 from A3, the foreign currency deposit ceiling to Baa3 from Baa2 and the short-term rating to P-3 from P-2, it said in a statement Wednesday.
The cuts reflect “instability due to the unexpected recent regime change, which resulted from the ongoing political crisis that first began as social unrest,” Moody’s said.
Riots have persisted in Tunisia even after Ben Ali’s Jan. 14 departure, with the country’s labor unions objecting to the inclusion of officials from the former president’s ruling party in the interim government, which has pledged to hold elections within six months.
Credit default swaps showing the cost of insuring Tunisian debt against default have risen to 1.77 percentage points, from 1.39 at the start of last week.
Standard & Poor’s Ratings Services and Fitch Ratings have signaled they may also lower their ratings on Tunisia’s bonds, by placing them on rating-watch negative. Both services currently rate the North African country two levels above junk.
Moody’s downgraded the bonds to Baa3, the lowest investment-grade rating, from Baa2 and changed the outlook to negative from stable, signaling the next move may be another
cut to junk status. The service also downgraded the government’s foreign currency bond ceiling to Baa1 from A3, the foreign currency deposit ceiling to Baa3 from Baa2 and the short-term rating to P-3 from P-2, it said in a statement Wednesday.
The cuts reflect “instability due to the unexpected recent regime change, which resulted from the ongoing political crisis that first began as social unrest,” Moody’s said.
Riots have persisted in Tunisia even after Ben Ali’s Jan. 14 departure, with the country’s labor unions objecting to the inclusion of officials from the former president’s ruling party in the interim government, which has pledged to hold elections within six months.
Credit default swaps showing the cost of insuring Tunisian debt against default have risen to 1.77 percentage points, from 1.39 at the start of last week.
Standard & Poor’s Ratings Services and Fitch Ratings have signaled they may also lower their ratings on Tunisia’s bonds, by placing them on rating-watch negative. Both services currently rate the North African country two levels above junk.
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