S&P improves Romania’s country rating to investment grade

Standard & Poor’s (S&P), the sole top rating agency in the field which still classified Romania under the ‘junk’ category for undesirable investments, changed our country’s grade one step up to ‘BBB-‘ for recommended investment placements and a stable outlook. “Romania is making progress in lowering foreign debts. In addition, fiscal consolidation and stability in the financial sector are moving in the right direction,” a press release issued by the financial rating agency notes. By foreign currency-denominated and national currency-denominated long-term loans, Romania climbed from ‘BB+’,’ the highest ‘junk’ level, to ‘BBB-,’ the lowest level for recommended investment placements.
The grade for short-term loans went up from ‘B’ to ‘A-3.’
S&P’s decision to improve our country’s sovereign rating has not had a significant impact on leu-denominated financial assets, analysis at the Austrian bank Raiffeisen have said, because existing prices already reflect a rather positive investor perception of Romania.
Moreover, the rating agency’s analysts believe that although Romania’s exchange rate regime is flexible, its independent monetary policy is restricted by high foreign currency usage rates, particularly where bank lending activities are concerned. “We expect the decline of ‘euroization’ to continue in the near future and be resumed before acceding to the Euro Zone,” S&P analysts have stated. Political uncertainty has not affected recent economic trends, according to the same sources. Romania’s country rating might be negatively adjusted if external disruptions occur, the financial sector becomes less stable, or the budget deficit increases significantly.

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