Fitch changes Moldova view to positive

Fitch Ratings said it changed the Republic of Moldova's outlook to positive from stable. The agency also affirmed the issuer's B- foreign- and B local-currency long-term issuer default ratings, B short-term foreign-currency issuer default rating and the B- country ceiling. Fitch also assigned a recovery rating of RR4 to Moldova's eurobond.

The positive outlook reflects Moldova's recent GDP growth rates, bolstered by worker remittances, a disciplined fiscal policy and a moderate public debt ratio, Fitch said. The change also considers the issuer's structural reforms and improved relations with the International Monetary Fund.

The ratings also reflect the country's significant negative external shocks that cloud its near-term outlook. The Russian government banned Moldovan wine imports last year and more than doubled the price of gas exports to Moldova.

Public and external debt ratios had been plummeting because of Moldova's limited access to international borrowing and steeply discounted debt restructure deals. The trend stabilized in 2006, but the agency said the country remains agricultural, poor and susceptible to political and economic shocks because of its trade deficit, inflation, liquidity and trade exposure to Russia.

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