Moody's lowers Pakistan

Moody's Investors Service said it downgraded Pakistan's foreign- and local-currency bond ratings by one notch to Caa1 from B3.

The short-term ratings remain unchanged at Not-Prime.

The outlook is negative.

Moody's said the main driver of the one-notch downgrade of Pakistan's government bond ratings is the increasing strain on the country's external payments position as a result of a rising trade deficit and decline in capital inflows.

Moreover, weak government finances, structural inflationary pressures and domestic political uncertainties are adding to Pakistan's external vulnerabilities and debt sustainability, thereby compounding the downward pressure on sovereign creditworthiness, the agency said.

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