S&P lowers Montenegro

Standard & Poor's said it lowered the long-term foreign- and local-currency sovereign credit ratings on the Republic of Montenegro to BB- from BB.

The agency also said it affirmed the short-term foreign- and local-currency ratings at B.

The outlook is stable.

Montenegro's 3 recovery rating reflects 50% to 70% expected recovery in a default. The transfer and convertibility assessment remains at AAA.

The downgrade reflects a view that the government is facing increasing challenges in its efforts to stabilize public debt levels given the weakening economic environment, pressures arising from contingent liabilities and diminishing external bank financing, S&P said.

Constraining the ratings are a view of Montenegro's weak external position and limited administrative capacity, the agency said, as well as its lack of monetary flexibility.

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