Moody's downgrades Zambia

Moody's Investors Service said it downgraded the government of Zambia's long-term issuer ratings to Caa2 from Caa1 and changed the outlook to negative from stable.

The downgrades reflect increasing external and liquidity pressures, which will impair the government's ability to service its debt over the medium term, Moody's said.

This raises the probability of default over the near term, including a distressed-debt exchange, the agency said.

The negative outlook reflects the risk of material losses to investors in the event of a default by Zambia, beyond what would be consistent with a Caa2 rating, Moody's said.

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