Moody's downgrades Slovenia

Moody's Investors Service said it downgraded Slovenia's government bond rating to Ba1 from Baa2. The outlook remains negative.

The agency said the decision to downgrade the rating was driven by the state of Slovenia's banking sector, the marked deterioration of Slovenia's government balance sheet and uncertain funding prospects that heighten the probability that external assistance will be needed.

The negative outlook reflects Moody's view that the challenges of the banking system remain substantial. The weak macroeconomic environment amplifies these challenges and increases the possibility of losses to bondholders, the agency said.

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