OREANDA-NEWS. On April 23, 2009 Moody's Investor Service decided to affirm Estonia's sovereign rating at A1. The rating outlook was left negative, reported the press-centre of Eesti Pank.

"The agency has concluded the Estonian government's creditworthiness is likely to remain resilient in the face of a deep and potentially prolonged recession. The country's ratings are supported by secure liquidity and the government's relatively good isolation from banking sector problems, as well as the government's efforts to keep the budget deficit below 3% of GDP," said Deputy Governor of Eesti Pank Marten Ross.

On 10 February 2009 Moody's placed Estonia's ratings on review for possible downgrade. Along with starting the review, the agency removed the negative rating outlook affirmed in November 2008. The rating agency decided this Thursday to conclude the review and leave the sovereign rating and the outlook unchanged.

"Similarly to the Standard & Poor's decision of 21 April, Moody's emphasised the importance of purposeful actions as regards the adoption of the euro and the need for further fiscal consolidation. Problems with controlling the fiscal deficit along with a delay in the adoption of the euro would place downward pressure on the country's ratings," noted Ross.

Ross highlighted Moody's recognition that unlike most other European governments, Estonia's implicit liabilities from the financial sector are negligible. Like the agency said, most of Estonia's banking system is owned by large banks from other EU countries, who have expressed their readiness to support their Estonian branches and subsidiaries with additional capital if required.

The negative outlook for Estonia's ratings reflects risks related to Latvia's economy and the fact that the Estonian economy needs the support of external demand to stabilise.

The rating agency Standard & Poor's provided their assessment of the Estonian sovereign ratings on April 21, when they affirmed them at A and A-1. Last week Fitch Ratings downgraded Estonia's rating by a notch to BBB+. Both of them left the rating outlooks negative.