Moody’s Changes Outlook on Finland’s AAA Rating to Negative
Move indicates possible downgrade by rating firm
Moody’s Investors Service on Friday changed its outlook on Finland’s top rating to negative, indicating a possible downgrade.
The move follows a similar action from Fitch Ratings in March and comes as the country is trying to cut costs and overhaul its tax system to restore competitiveness.
Standard & Poor’s Ratings Services, meanwhile, downgraded Finland last year to double-A-plus.
On Friday, Moody’s cited the Nordic country’s low economic growth as exports weakened largely due to the decline in the electronics industry. Moody’s projects the Finnish economy to expand 0.3% in 2015 and 1% in 2016.
Still, the rating firm highlighted that Finland remains one of the most fiscally prudent and institutionally strong nations among the countries it rates.
In 2014, Finland’s fiscal deficit crossed for the first time the European Union threshold of 3% of gross domestic product and Moody’s projects the nation’s debt-to-GDP ratio will exceed this year the 60% threshold. Moody’s expects the ratio to peak at around 65% in 2017.
The European Commission, Moody’s noted, has indicated it could take action against Finland, because of the high deficit.
Meanwhile, Moody’s also changed its outlook on Finnvera PLC’s corporate ratings to negative, from stable.
Finnvera, which is by law fully owned by the state and managed by the Ministry of Employment and the Economy, offers domestic financing along with export credit guarantees and financing for export credits.
Separately, Moody’s affirmed Bulgaria’s Baa2 government bond rating with a stable outlook.
wsj
