The review was prompted by Pakistan’s participation in the DSSI program from G20
Moody’s maintained Pakistan’s sovereign credit rating at B3 with a stable outlook. Recently, the ratings agency opened a review in Pakistan’s credit rating due to Pakistan’s announcement of seeking participation in the G20 Debt Service Suspension Initiative (DSSI), which created doubts that private-sector creditors may be asked by the country to extend similar treatment to Pakistani debt.
“While Moody’s continues to believe that the ongoing implementation of DSSI poses risks to private creditors, the decision to conclude the review and confirm the rating reflects its assessment that, at this stage, for Pakistan, those are adequately reflected in the current B3 rating” the ratings agency said in a statement.
Moody’s said it sees some potential risk for the private creditors due to the ongoing implantation of DSSI by Pakistan, the risk is well covered by the country’s current B3 rating.
“While Moody’s continues to believe that the ongoing implementation of DSSI poses risks to private creditors, the decision to conclude the review and confirm the rating reflects its assessment that, at this stage, for Pakistan, those are adequately reflected in the current B3 rating,” the statement said.
Moody’s expects Pakistan to maintain credit metrics in general despite the threats posed by the novel coronavirus.
“The stable outlook reflects Moody’s view that the pressures Pakistan faces in the wake of the coronavirus shock and prospects for its credit metrics, in general, are likely to remain consistent with the current rating level,” the statement said.
Political stability, macroeconomic conditions, and security situations are some of the main factors taken into account when assessing the credit rating of a country. The stable outlook allows investors to maintain their peace of mind as the chances of an adverse financial event is unlikely in the country.