Moody’s downgrades Congo

Moody's Investors Service said it downgraded the Republic of the Congo's issuer rating to B3 from B2 and initiated a review for further downgrade.

The agency also said it lowered the country’s local- and foreign-currency bond and deposit ceilings by one notch to Ba3.

The key driver for the downgrade is the weak state of the sovereign's institutions, as evidenced by the government's missed payment in June on its only international bond, Moody’s said.

The purpose of the downgrade is to determine whether the payment will be resolved very quickly with no loss to bondholders, the agency said, or whether the payment will remain outstanding for an extended period of time, leading to investor losses.

The review also will focus on the state of the country's public finances, the stress on the government's liquidity position and its commitment and institutional ability to honor its future debt obligations, Moody’s said.

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