Moody’s Changes its Perspective on the Romanian Government Rating

UniCredit Bank S.A.
Moody’s reaffirms the Baa3 rating and goes from positive to stable.
Mon, 24/04/2017

“Moody's has affirmed the Baa3 ratings of Romania based upon the underlying fundamentals of the economy and convergence trends regarding wealth and institutional strength under the aegis of EU membership. Although expected to weaken somewhat, the still relatively moderate debt levels relative to GDP and revenue, as well as strong debt affordability metrics, also support the current rating level. The long-term country ceilings of Romania for local and foreign currency bonds and for local currency bank deposits remain unchanged at A3.”

In this context, Moody's Investors Service has changed the outlook on the ratings of the Government of Romania from positive to stable. The 2 main reasons why Moody’s changed its view on the Romanian Government ratings are as follows:

  • A slight deterioration in the public finance and debt due to an expansionary fiscal policy, will lead to a raise of the debt-to-GPD ratio in Romania;

  • A correlation between fiscal policies and wage growth might have a negative consequence on competitiveness;

Impact on investors: Although Moody’s changed its perspective on the Romanian Government’s rating, we note that the risks to potential investors and that economic fundamentals (economic strength, framework…) of the issuer, remain unchanged.