Moody's cuts Estonia view to negative

Moody's Investors Service said it changed the outlook on the government of Estonia's A1 local- and foreign-currency bond ratings to negative from stable, along with the outlook on its A1 foreign-currency deposit ceilings. The outlook on the Aa1 foreign-currency bond ceiling remains stable.

The change in outlook was precipitated by a combination of the global liquidity crisis, which is likely to deepen the ongoing economic slump and the deteriorating economic situation in the neighboring Baltic countries, Moody's said. Both factors present an increased risk to the government's balance sheet over the next few years, the agency added.

Moody's said it believes the liquidity crisis will cause the country's current economic adjustment to be more severe than previously envisaged.

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