BELGRADE (Serbia), September 9 (SeeNews) - Erste Group expects Moody's to upgrade Serbia's Ba3 long-term issuer and senior unsecured ratings in the next 12 months if the government continues to support fiscal consolidation and achieves further success in the reform of state-owned enterprises, it said on Monday.
Erste considers that Moody's played safe by upgrading the outlook on Serbia's long-term issuer and senior unsecured ratings to positive from stable on Friday and does not expect any market reaction, the Austrian banking group said in an instant comment.
On Friday, Moody's upgraded the outlook on Serbia's ratings, backed by the improving debt metrics that will bring the government debt-to-GDP ratio in line with the median of Ba rated peers and the country's robust medium-term economic growth outlook.
On the other hand, according to Moody’s, the gradually declining but still large share denominated in foreign currency poses a credit risk, as does the still high degree of euroization in the banking sector. Additionally, still sizeable informal sector and structural challenges in the labour market weigh on potential growth.
For these reasons, Moody's kept the long-term issuer and senior unsecured ratings of Serbia at Ba3, one notch below the ratings given by Standard and Poor's (S&P) and Fitch.