Credit Ratings
A sting in the tail
By Emma Cosgrove
In early December, Finance Minister Raya Hassan announced that Lebanon had successfully issued $500 million in Eurobonds in an effort to refinance the country’s staggering public debt.
S&P upgrades Lebanon credit rating
Standard & Poor’s Ratings Services raised Lebanon’s sovereign-credit ratings and gave them a positive outlook because of banking resilience and the expectation of political stability in the medium term.
Over three years of political flux, Lebanon’s public finances and especially its banking system remained resilient, according to S&P. In addition, the new party consensus improves the likelihood of achieving reforms recommended by the International Monetary Fund and the Paris III conference on rebuilding the country. These reforms could lower fiscal deficits, cut government debt-to- gross-domestic-product levels and reduce Lebanon’s liabilities.
The agency Tuesday said it expects, conservatively, that the central government fiscal deficit could fall to 6.3% of GDP in 2012 from 9.9% in 2008.
S&P raised its long- and short-term sovereign-credit ratings on the Republic of Lebanon one notch to B. Further ratings action will depend on how much success the new government has in increasing fiscal stability. The rating would face downward pressure should civil unrest break out or the government falters in its pursuit of the Paris III reforms. WSJ
Moody’s revised to positive Lebanon’s credit ratings
Moody’s Investors Service on Thursday said it could upgrade Lebanon’s credit ratings if the government continues to improve the ability to finance its wide fiscal deficit, while avoiding political instability.
The ratings agency revised to positive from stable the outlook on Lebanon’s B2 credit ratings, saying the decision reflects the continued improvement in the country’s external liquidity and the resilience of its banking system, as well as the formation of a consensus government in November.
“Lebanon’s public finances have proven resistant to serious political and economic shocks in recent years,” Moody’s analyst Tristan Cooper said in a statement.
“This is due to the strengthened resilience of the country’s banking system, which is the government’s primary creditor,” he added.
Before upgrading Lebanon’s ratings to B1, Moody’s wants to see a continuation of these positive trends, especially the strengthening of the government’s ability to finance its fiscal deficit and a further improvement in the country’s debt metrics. Reuters
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