Moody’s downgrades Congo

Moody's Investors Service said it downgraded the long-term local and foreign currency issuer ratings of the government of the Republic of the Congo to Caa2 from B3 and maintained the negative outlook.

Concurrently, the agency lowered the government's local currency and foreign currency long-term bond and deposit ceilings to B2 from Ba3.

Moody’s said the key drivers behind the two-notch downgrade and the change in ceilings are: (a) Moody's expectation that Congo’s government will imminently default on its Eurobonds and could remain in default for a protracted period of time; and (b) increasingly acute liquidity pressures that could ultimately lead to sizeable losses for private sector creditors in the coming years.

The negative outlook reflects the risks that private sector creditors could incur greater losses than are currently anticipated by Moody's Caa2 rating, the agency added.

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