S&P revises Estonia sovereign credit outlook up to stable

Reuters    Translate This Article
19 October 2012

NEW YORK (Reuters) - Standard & Poor's on Friday revised its sovereign credit outlook for Estonia to stable from negative and affirmed the AA-minus rating citing significant fiscal buffers to guard against a prolonged euro zone economic slump.

'The ratings are supported by our view of Estonia's stable political environment, demonstrated control over government finances, unleveraged government balance sheet, and versatile and flexible economy,' S&P said in a statement.

The outlook revision was based upon expectations the Baltic nation will continue to demonstrate resilient economic performance with the benefits of an export market outside of the euro zone. However, the firm said it was unlikely to raise the rating over the next two years.

Estonia would need to achieve higher income levels that come closer to the euro zone average, reduce volatility in economic growth and inflation and cement a reputation for low reliance on external financing to warrant consideration for an upgrade, S&P said.

S&P said the government's current low debt burden of around 2 percent of gross domestic product (GDP) provides 'significant fiscal space to absorb potential negative economic shocks.'

Moody's Investors Service rates Estonia one notch lower at A1 with a stable outlook, similar to the A-plus with a stable outlook assigned by Fitch Ratings.

(Reporting By Daniel Bases; editing by Sofina Mirza-Reid)

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