Nov. 29 (Bloomberg) -- Romania’s local-currency sovereign debt rating was cut one notch to BB+ at Standard & Poor’s, which revised its methodology to narrow gaps between local- and foreign-currency grades.
Romania’s foreign-currency grade of BB+, the highest non- investment grade, was affirmed, S&P said today in a statement. The outlook is stable, indicating the company is more likely to leave the ratings unchanged than to raise them or lower them.
The cut in the local-currency rating is due to the “high euroization” of the Romanian economy which “limits monetary flexibility,” S&P said. The ratings are supported by a narrowing fiscal deficit and the economy’s rebalancing, it said.
“The stable outlook reflects our opinion that Romania’s government will continue to consolidate its public finances largely in line with the targets it has specified,” S&P said.
The leu strengthened 0.1 percent to 4.356 per euro as of 7:48 p.m. in Bucharest.
The cut in the local-currency rating narrows the gap between the two assessments because “we believe governments are likely to have fewer incentives to differentiate between their local- and foreign-currency debt in the event of a debt restructuring, given the increasing globalization of markets,” S&P said.
Moody’s Investors Service rates Romania Baa3 while Fitch has the country at BBB-, the lowest investment grades at both companies.
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