London, 28 February 2013 — Moody’s Investors Service has today downgraded Tunisia’s government debt rating to Ba1 from Baa3, and has placed the rating on review for further downgrade.
Today’s one-notch downgrade was prompted by the following factors:
(1) The country’s increased political instability, which has negative implications for the wider economy;
(2) Further delays in adopting the new constitution and organising elections, which are prerequisites for any sustainable economic recovery; and
(3) The likely continued deterioration of Tunisia’s credit fundamentals two years since the start of the Jasmine Revolution.
Moody’s review for further downgrade will focus on assessing the downside risks to Tunisia’s political situation and the country’s external payments position.
As part of today’s rating action, Moody’s has also lowered the Baa1 country ceiling for foreign-currency bonds by one notch to Baa2 and the Baa3 country ceiling for foreign-currency bank deposits by two notches to Ba2. Moody’s has affirmed the P-3 short-term foreign-currency bond ceiling while the short-term foreign-currency deposit ceiling was downgraded to NP. Moody’s has also lowered the Aa2 local-currency bond and deposit ceilings by six notches to Baa2.
In addition, Moody’s has lowered to Ba1 from Baa3 the debt ratings of the Central Bank of Tunisia and also placed them on review for further downgrade. The Government of Tunisia is legally responsible for the payments on all the central bank’s bonds issued on behalf of the government.
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