LONDON, April 8 (Reuters) - Fitch on Wednesday cut its
ratings on Estonia, Latvia and Lithuania, warning that the
Baltic states faced deteriorating economic prospects that
threatened their macroeconomic policy frameworks.
Many economies in emerging Europe have already been hit by
credit ratings downgrades, including Bulgaria, Russia, Ukraine
and Romania.
Here is a list of long-term foreign currency ratings and
outlooks for countries in emerging Europe, until recently seen
as one of the safest regions across emerging markets but now
exposed to credit worries, recession in the euro zone and
increased banking problems.
COUNTRY S&P MOODY's FITCH
BULGARIA BBB Baa3 BBB-
Negative Stable Stable
Fitch cut Bulgaria's foreign currency rating on Nov. 10 to
BBB-, the lowest investment-grade level, saying a marked decline
in external financing flows has heightened its recession risks.
CROATIA BBB Baa3 BBB-
Negative Stable Stable
S&P cut its rating on Croatia on March 16, warning of a
deteriorating liquidity position and slow policy response,
coupled with a sizeable current account deficit.
CZECH REPUBLIC A A1 A+
Stable Stable Stable
Moody's on Dec. 8 revised its outlook for the Czech Republic
to stable from positive, noting that the country was unlikely to
have a ratings upgrade in the next 12 to 18 months because it
was facing slowing economic growth.
ESTONIA A A1 BBB+
Negative Negative Negative
Fitch on April 8 said Estonia's economic downturn was
turning out to be more severe than expected. S&P put Estonia on
credit watch negative on Feb. 24 while Moody's on Feb. 24 placed
the country on review for a possible downgrade.
GEORGIA B -- B+
Stable NegWatch
Fitch on April 7 placed Georgia's long-term foreign and
local currency issuer default ratings on Rating Watch Negative,
saying rising domestic political tensions were making it more
difficult for authorities there to help the economy recover from
the twin shocks of the 2008 war with Russia and the global
financial crisis.
HUNGARY BBB- Baa1 BBB
Negative Negative Negative
Moody's on March 31 cut Hungary's rating to Baa1, citing its
weak financial position. A day earlier, S&P cut Hungary's rating
to BBB-, one notch above junk.
ICELAND BBB- Baa1 BBB-
Negative Negative Negative
Moody's on Dec. 4 cut Iceland's rating by one notch with a
negative outlook, saying the island's banking crisis and
currency collapse had significantly damaged the government's
financial strength.
KAZAKHSTAN BBB- Baa2 BBB-
Negative Stable Negative
Fitch on Feb. 19 placed Kazakhstan on ratings watch negative
and cut its credit rating for 10 domestic banks. S&P has also
warned that Kazakhstan could face a sovereign rating downgrade
if the cost of a financial sector bailout rises further.
LATVIA BB+ Baa1 BB+
Negative Negative Negative
Fitch on April 8 cut Latvia's rating to "junk" status,
saying there was a risk of policy implementation as the
government grappled with popular discontent rising as a result
of the worsening economy. S&P also cut Latvia's rating on Feb.
24 to "junk", making the Baltic state the only European Union
country aside from Romania to be non-investment grade.
LITHUANIA BBB A2 BBB
Negative Negative Negative
Fitch on April 8 lowered Lithuania's rating, saying the
government's ability to push through austerity measures could be
threatened by a public backlash. S&P cut the country's rating on
March 24, saying the country's political and economic capacity
to adjust to a sharp fall in capital flows was constrained by
high levels of foreign debt and a rigid exchange rate system.
Moody's on Feb. 10 put Lithuania's A2 rating on review for a
possible downgrade, saying economic growth in the Baltic state
could remain weak for longer than expected.
MOLDOVA -- Caa1 B-
Stable Stable
Fitch on April 8 said Moldova's B- rating could be
threatened if political unrest proved prolonged and damaged the
economy. The ratings agency lowered the country's outlook to
stable from positive on Sept. 15.
MONTENEGRO BB+ Ba2 --
Negative Negative --
Moody's on Dec. 18 lowered its outlook on Montenegro to
negative from stable, citing the reduced liquidity of its
banking system due to the global financial crisis, falling
aluminium prices and shrinking foreign direct investment.
POLAND A- A2 A-
Stable Stable Stable
Standard & Poor's cut its outlook on Poland to stable from
positive on Oct. 27, citing the deterioration in the
international markets and tightening credit conditions.
ROMANIA BB+ Baa3 BB+
Negative Stable Negative
Romania was the only European Union member with a
non-investment grade rating until Latvia's downgrade. On Nov. 10
Fitch followed Standard and Poor's in cutting it to "junk" and
gave the country a negative outlook, citing the risk of a severe
financial and economic crisis.
RUSSIA BBB Baa1 BBB
Negative Stable Negative
Fitch on Feb. 4 downgraded Russia to BBB and said further
cuts were possible due to low commodity prices, high capital
outflows, melting reserves and mounting corporate debt problems
-- leaving Russia two notches away from being "junk" grade.
SERBIA BB- -- BB-
Negative -- Negative
Fitch on Dec. 23 revised its outlook for Serbia to negative
from stable, saying the country faced heightened credit risks
due to its high external debt as a result of the financial
crisis. In July, S&P said the arrest of war crimes suspect
Radovan Karadzic augured well for Serbia's path to EU accession
but retained its negative outlook on the country citing economic
overheating risks.
TURKEY BB- Ba3 BB-
Negative Stable Stable
Fitch on Jan. 14 affirmed Turkey's BB- long-term foreign
currency ratings, saying the country has proved resilient to the
global credit crunch. S&P on Nov. 13 revised its outlook on
Turkey to negative from stable but affirmed the country's BB-/B
foreign currency rating. Moody's said on Dec. 2 that Turkey
would retain its Ba3 rating although the momentum was for the
rating to move up in the longer term.
UKRAINE CCC+ B1 B
Negative Under Review Negative
S&P on Feb. 25 cut Ukraine's long-term foreign and local
currency ratings to CCC+ from B and said the outlook was
negative because the country's failure to implement an agreement
with the International Monetary Fund and an absence of political
will to implement budgetary revisions. Moody's put Ukraine under
review for a possible downgrade on Feb. 24.
(Compiled by Carolyn Cohn and Sebastian Tong)
