Moody’s upgrades Latvia to Baa1

Moody's Investors Service said it upgraded Latvia's government bond rating by one notch to Baa1 from Baa2.

The outlook is stable.

Latvia's provisional Prime-2 short-term rating was affirmed.

Moody’s said the key drivers of the upgrade of Latvia's government bond rating are: (a) Latvia's resilient and balanced economic recovery combined with the country's positive medium-term growth prospects; (b) the improvement in Latvia's fiscal position, as the general government financial deficit-to-GDP ratio remains low, and as the general government debt-to-GDP ratio is expected to fall sharply in 2015; and (c) the adoption of the euro on Jan. 1, which reduced Latvia's susceptibility to event risk, by providing its banking system with access to liquidity and institutional support from the European Central Bank and by lowering the ratio of foreign-currency government debt relative to total general government debt.

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