Moody’s cites improved governance and easing external vulnerability risks as it raises Pakistan’s sovereign rating and keeps the outlook stable.
ISLAMABAD: Global ratings agency Moody’s has upgraded Pakistan’s sovereign credit rating to B3 from Caa1, citing improvements in governance and a reduction in external vulnerability risks.
The agency maintained Pakistan’s rating outlook at stable, according to the rating action announced Monday.
The upgrade marks a significant improvement in Pakistan’s sovereign credit assessment and follows a period of macroeconomic stabilisation and efforts to strengthen the country’s external position.
Moody’s decision comes about a month after S&P Global Ratings raised Pakistan’s long-term sovereign credit rating to B from B-, also maintaining a stable outlook.
A sovereign credit rating is an assessment of a government’s creditworthiness and its ability to meet debt obligations. An improvement in the rating can strengthen investor confidence and potentially improve access to international capital markets and financing.
Moody’s latest action also raises Pakistan’s local- and foreign-currency issuer and senior unsecured debt ratings to B3 from Caa1. The agency also upgraded the rating for Pakistan’s senior unsecured medium-term note programme to (P)B3 from (P)Caa1.
The rating agency’s assessment reflects a more favourable view of Pakistan’s economic and financial position, particularly improvements in governance and the easing of external risks.
The move is another positive development for Pakistan’s efforts to improve macroeconomic stability, strengthen debt sustainability and restore confidence among international investors.
However, the B3 rating remains in the speculative-grade category, meaning Pakistan continues to face significant credit risks despite the upgrade. Moody’s rating scale places B-rated obligations within the category of obligations considered speculative and subject to high credit risk.
About The Author
