Moody's: Belarus bonds supported by low debt

Moody's Investors Service said in a report that the B1 government bond ratings of Belarus are supported by recent excellent macroeconomic performance and low debt and are constrained by the inflexibility of Belarus' tightly regulated and industrially concentrated economy.

The government bond ratings, along with Moody's assessment of a moderate risk of a payments moratorium in the event of a government default, serves as the basis for Belarus' Ba2 foreign currency country ceiling for bonds.

"The ratings reflect both Belarus' good record of economic growth over many years and the changed circumstances and challenges now facing the government," said Moody's vice president Jonathan Schiffer, author of the report.

"This may lead to certain economy-wide difficulties in efficient adjustment to external shocks."

The agency said that the Republic of Belarus recently concluded an agreement with OAO Gazprom of the Russian Federation whereby Gazprom will purchase 50% of Beltransgaz transit pipeline over several years and Russian gas import prices will rise significantly, said Schiffer.

According to the analyst, the new, substantial rise in energy prices will have a significant micro and macroeconomic affect on the Belarusian economy.

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