Moody's rates Montenegro Baa1, Ba2

Moody's Investors Service said it assigned first-time sovereign ratings for the Republic of Montenegro, including a Baa1 country ceiling for long-term foreign-currency debt and a Ba2 issuer rating for the foreign-currency debt obligations of the government.

The ratings reflect the new country's growing integration with the European Union and the financial stability afforded by the use of the euro as the official currency, Moody's said.

Fiscal policy has been increasingly prudent in recent years, enough so that the government finished 2007 with a budget surplus for the second year in a row, the agency said.

Among Montenegro's main rating constraints are its lack of administrative capacity and relatively underdeveloped judicial institutions, Moody's said. These are likely to impede the country's modernization and economic diversification, the agency added.

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