Moody's Places Romania In Second Rating Risk Category

Rating agency Moody's grouped emergent states into four risk categories and placed Romania, Bulgaria and Croatia in the second category, that of countries whose credit fundamentals are resilient but which could be subject to some rating volatility should assumptions of support prove unfounded.

Romania, Croatia and Bulgaria were rated Baa3 by Moody's.
 
In Moody's report entitled "Emerging' European Sovereigns: The Case for Risk Differentiation", the first category includes countries whose rating is well anchored (Czech Republic, Slovakia and Poland), the third includes countries whose relative credit fundamentals are being eroded but for whom external support provides a rating floor (Estonia, Lithuania, Latvia); and the fourth category includes countries whose credit fundamentals are eroded and support is less likely (Ukraine).
 
Moody's has also developed two 'Government Refinancing Risk Indicators': GRRI measures the refinancing risks of the government, whereas GRRI+ additionally includes contingent liabilities that may arise when the government takes on debt on behalf of banks or corporates.
 
"These indicators show that the most vulnerable countries are those that have been undergoing a rapid process of financial deepening -- namely Latvia,Lithuania, Romania and Ukraine," says Dietmar Hornung, Vice President --Senior Analyst in Moody's Sovereign Risk Group.
 
According to Moody's, the Romanian government should provide in 2009 a gross supplementary financing of EUR14.9 billion, representing 11.2% of the GDP, and 33.3% of revenues, respectively.
 
Romania's adjusted external financing need is at EUR29 billion, or 21.8% of the GDP, according to the report.
 
The Romanian government plans to borrow EUR19 billion from EC and IMF, following the evaluation carried out by Finance Ministry and the central bank, government sources told Mediafax Tuesday.

Mediafax