Moody's cuts Belarus bonds

Moody's Investors Service said it downgraded Belarus' foreign- and local-currency bond ratings to B2 and revised the outlook to negative from stable.

The rating actions were prompted by Belarus' significant near-term external financing gaps and the medium-term difficulties of reorienting the current external debt funded, domestic demand-led growth model, Moody's said.

Belarus' foreign-currency bond ceiling was lowered to B1 and the foreign-currency bank deposit ceiling to B3. Belarus' local-currency bond and deposit ceilings were lowered to Ba1.

The ratings consider the external financing requirements of Belarus' large current account deficit as well as the concern that Belarus will not be able to smoothly transition from its current external debt funded growth model to one that relies on productivity and competitiveness improvements for output growth, the agency said.

The negative outlook incorporates the concern that even if external financing gaps are bridged, necessary adjustments to improve international competitiveness and economic resilience will be hard to implement, the agency added.

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