Moody's affirms Dominican outlook

Moody's Investors Service said it affirmed the negative outlook on the Dominican Republic's B3 country ceiling rating for foreign debt.

Moody's said that the present rating reflects the significant deterioration registered in the Dominican Republic's credit fundamentals over a two-year period as well as credit risks now evident.

Moody's points out that the country has found it difficult to stay current on its external debt obligations. As a result, the government was forced to solicit a "grace period" on payments coming due to Paris Club creditors during 2004 and 2005.

"If and when debt restructuring ultimately takes place," Moody's said, "the Dominican Republic's relatively low level of external debt is likely to lead to a debt swap that should involve moderate losses to bondholders."

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