Moody's cuts Bulgaria view to stable

Moody's Investors Service said it changed the outlook on the Baa3 foreign- and local-currency ratings of the government of Bulgaria to stable from positive.

The outlook was downgraded to stable from positive.

Moody's said it believes the prospect of an upgrade in the next 18 months has diminished because of deteriorating external imbalances - from already high levels - combined with the growing prospect of a sharp slowdown in economic growth next year in the context of the spreading global credit crunch.

The agency said it is concerned that Bulgaria's outsized external imbalances leave the economy exposed to a potential reduction in external liquidity and asset price corrections, which could exert pressure on the domestic financial system.

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