Moody’s lowers Costa Rica

Moody's said it downgraded the Government of Costa Rica's long-term issuer and senior unsecured bond ratings to B1 from Ba2 and changed its outlook to negative, concluding the review for downgrade that was initiated on October 18.

The key drivers for the downgrade are the continued and projected worsening of debt metrics on the back of large deficits despite fiscal consolidation efforts; and the significant funding challenges emerging for the country as rising debt, deficits and interest costs lead to rapidly rising borrowing requirements, Moody’s said.

In a related decision, Moody's lowered Costa Rica's long-term country ceilings: the foreign currency bond ceiling to Ba2 from Baa3; its foreign currency deposit ceiling to B2 from Ba3; and its local currency bond and deposit ceilings to Baa3 from Baa1. The short-term foreign currency bond ceiling was lowered to Not Prime from P-3 and the short-term foreign currency deposit ceiling remains unchanged at Not Prime.

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