Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms Estonia's A1 rating; maintains stable outlook

21 Jul 2017

London, 21 July 2017 -- Moody's Investors Service, ("Moody's") has today affirmed Estonia's A1 long-term local and foreign currency issuer ratings. The outlook remains stable.

The factors supporting today's affirmation are:

(1) The resilience of Estonia's economy to external shocks, with economic strength being supported through improving investment prospects;

(2) The government's very low debt which, despite budget easing, continues to provide ample fiscal space to withstand a credit shock; and

(3) The country's susceptibility to geopolitical event risk.

The stable outlook incorporates Moody's assumption that Estonia's strong credit profile, which has largely withstood shocks from weaker growth in Russia (Ba1 stable) and Finland (Aa1 stable), will continue to benefit from the country's forward-looking economic policies, supporting further income convergence towards the European Union (EU) average. It also reflects Moody's expectation that a planned fiscal loosening will not risk Estonia's very prudent fiscal position, which will continue to be among the strongest in our rating universe.

Estonia's local and foreign currency long-term bond and deposit ceilings remain unchanged at Aaa. The short-term foreign currency bond and deposit ceilings are also unaffected and remain at P-1.

RATINGS RATIONALE

RATIONALE FOR THE AFFIRMATION

FIRST DRIVER -- The economy's resilience to external shocks

The first driver supporting the affirmation is the resilience of Estonia's economy to external shocks. Estonia's average economic growth of 3.7% during 2010-14 was amongst the highest in the euro area, reflecting the significant competitiveness gains achieved in 2010 through a sharp reduction in labour costs. At the same time, Estonia's economy has largely withstood more recent shocks from the economic contraction in Russia and weak growth in Finland.

Estonia's real exports grew by 4.0% in 2016, despite a contraction in Russia, one of its traditional export markets, and the ongoing trade embargo on agricultural exports to this country. This reflects Estonian exporters' ability to re-orientate towards faster growing markets, including China (A1 stable) and Germany (Aaa stable), at the same time as the share of exports to Russia has almost halved compared to 2013 (to 6.5% of exports in 2017 from 11.5% in 2013). Estonia's economic strength is further underpinned by its integration into the Nordic supply chain (primarily Sweden, Aaa stable, and Finland, which together account for around 34% of goods exports in 2016) which supports its larger share of high technology product exports compared to other Baltic countries. Furthermore, efforts to move up the value chain in wood production are reflected in Estonia being one of the largest European exporters of prefabricated buildings.

Moody's expects that improving investment prospects, supported by EU funds which equate to around 47% of the planned national public investment, will enhance the resilience of the economic recovery underway, reflected in the strong investment contribution to GDP growth in Q1 2017. Estonia will also benefit from stronger growth in its main trading partners in the EU, which absorb more than 70% of all exports. As a result, Moody's expects the economy to expand by 3.0% and 2.8% in 2017 and 2018, slower than pre-crisis but above expected average growth in the euro area over the next two years.

At the same time, in spite of efforts by the authorities to improve labour participation, Moody's expects Estonia's limited domestic labour supply will contribute to a tightening of the labour market and continue to place upward pressure on wage growth in the coming years, posing a threat to Estonia's future competitiveness. Furthermore, the EC expects Estonia's working age population will shrink over the next decade, adding to competitiveness challenges in the medium term. This will also likely restrict the availability of suitable skills in the economy, which acts as a constraint to foreign investment, although the authorities are taking some steps to ease restrictions on economic immigration, including in the growing IT sector.

SECOND DRIVER -- The government's very strong balance sheet

The second driver of Moody's decision to affirm Estonia's government bond rating is the government's exceptionally strong balance sheet, as evidenced by its low level of indebtedness, which continues to cushion the impact of external shocks on government finances.

Estonia's very sound fiscal management continues to support one of the lowest debt burdens in Moody's rated universe. The general government debt-to-GDP ratio fell to 9.5% of GDP in 2016, from 10.1% the previous year, and Moody's expects the debt burden to remain broadly unchanged over the next two years (9.6% of GDP in 2018), far below the median of its A-rated peers (around 40% of GDP in 2016).

The country also benefits from substantial fiscal reserves held across a number of funds, currently standing at 9.8% of GDP of which around €785 million (3.8% of 2016 GDP) are held in a liquidity reserve, which can be tapped in the event of emergencies, unexpected budget shortfalls and to offset the cost of wider structural reforms. While Moody's expects these reserves to decline to around 7% of GDP by 2021, to finance Estonia's planned fiscal loosening, the reserves will continue to provide a significant degree of shock absorption. On a net basis, general government debt would still only amount to around 3% of GDP at its peak in 2019.

THIRD DRIVER -- The country's susceptibility to geopolitical event risk

The third driver of Moody's decision to affirm Estonia's government bond rating is the country's moderate exposure to geopolitical event risk posed by volatile relations with Russia.

Moody's expects that geopolitical risk, stemming from the volatile geopolitical environment in the region shaped by its relations with Russia, will continue to constrain Estonia's rating profile. Improvements to energy security in the Baltic region have reduced Estonia's energy reliance on Russia. However, Moody's notes that a significant deterioration in the economic or security situation vis-à-vis Russia, leading to a material and sustained deterioration in Estonia's economic growth prospects, would have negative implications for the rating.

RATIONALE FOR STABLE OUTLOOK

The stable outlook on the rating incorporates Moody's assumption that Estonia's strong credit profile, which has withstood shocks from weaker growth in Russia and Finland, will continue to benefit from the country's forward looking economic policies, supporting further income convergence towards the EU average. It also reflects Moody's expectation that a planned fiscal loosening will not risk Estonia's very prudent fiscal position, which will continue to be among the strongest in our rating universe.

Risks to Moody's growth forecasts are balanced. The economy could grow faster than expected if improving economic sentiment becomes entrenched, while better economic conditions in Russia could have positive spillovers for the Estonian economy. On the other hand, any impact from rising unit labour costs on Estonia's export competitiveness would likely weigh on the outlook for the small, open economy.

Moody's notes that the authorities' planned fiscal loosening, which has been facilitated through a lowering of the medium-term budget target, will lead to a small deficit for the first time in four years. Nevertheless, Moody's considers the likelihood of Estonia entering the EC's Excessive Deficit Procedure to be very low and any deterioration in the structural budget will likely be corrected over the medium-term given Estonia's historically strong budget performance. At the same time, Estonia's fiscal reserves will continue to provide an adequate cushion such that the emergence of fiscal deficits will not have a material impact on the government's very low debt burden.

WHAT COULD MOVE THE RATING UP/DOWN

Upward rating pressure would arise from an easing in geopolitical risk in the region as well as an improvement in Estonia's growth profile, through a more sustained contribution from investment, which leads to a much less volatile economic growth pattern and helps to improve growth potential. In addition, further progress on structural reforms which help to mitigate the effects of a declining working age population, in turn easing competitiveness pressures, would also be credit positive.

Conversely, a material and sustained deterioration in geopolitical risk or Estonia's economic growth prospects could undermine fiscal prudence and have negative implications for the rating. This could result from Russian interference in Estonian domestic affairs which manifested itself in unrest among the sizeable Russian speaking population, beyond what was observed in 2007. Furthermore, a material deterioration in cost competitiveness which impacted Estonia's export market share would give rise to downward pressure, while the emergence of structural imbalances in the form of a large current account deficit would also be credit negative.

GDP per capita (PPP basis, US$): 29,313 (2016 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 1.6% (2016 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 2.2% (2016 Actual)

Gen. Gov. Financial Balance/GDP: 0.3% (2016 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: 2% (2016 Actual) (also known as External Balance)

External debt/GDP: 91.2% (2016 Actual)

Level of economic development: High level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 18 July 2017, a rating committee was called to discuss the rating of the Government of Estonia. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutional strength/framework, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. The issuer's susceptibility to event risks has not materially changed.

The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Evan Wohlmann
Vice President - Senior Analyst
Sovereign Risk Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Yves Lemay
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
Global Footer | Moody's