Moodys upgrades Mauritius economic ratings

Moody’s Investors Service has elevated the Mauritius’ foreign and local currency government bond ratings to Baa1 from Baa2, after having placed  the country in a holding position for possible upgrading since the middle of March.

Moody’s provides credit ratings in global capital markets, research and analysis. The intention of Moody’s ratings is to provide investors with a system of progression by which future relative creditworthiness of securities may be measured regionally and globally.

According to the rating agency, the justification behind the upgrade of a Baa1 standard is predominantly due to the country’s economic performance, resistance to shocks, the growth recorded in recent years and Government’s momentous progress in reducing its debt-servicing liability or the monies required over a yearly period to cover the repayment of interest and principal on a debt.

“The Mauritian economy’s strong performance during the global financial crisis is attributable to extensive government intervention. As a small export-dependent economy, Mauritius is vulnerable to changes in global demand, in particular changes originating from its main trading partner, the European Union” says Moodys in a statement to reporters.

The leading reason behind the upgrading, states Moody, has is specially the clear strengthening of the organized framework, which has allowed the Mauritian economy to withstand the negative impacts of both the global financial crisis and essentially the euro crisis.

The second main driver is the progress being made in diversifying the Mauritian economy by encouraging Foreign Direct Investment (FDI) from multiple countries.

The Mauritian government has also taken steps to subdue economic downturn, which has included the widening of its economic links with Asian powerhouses China and India.

With the country pro-actively progressing the economy from a somewhat low-skilled exporter to that of a substantially skilled service-orientated economy, stability will be ensured in the medium term, says the rating agency.

The reintroduced positive trend in Mauritius debt is the third reason, which has helped in raising the Mauritian rating. Although both Mauritius’ affordability ratio and current debt still compare unfavourably with those of Baa-rated peer countries, Moody’s still remains cautiously optimistic that improvements in Mauritius “debt dynamics” are likely to continue.

Moody’s has also upgraded Mauritius’ foreign-currency limits for bonds and deposits to A2 from Baa1 and the country limits for local-currency debt and deposits have been amended to A1 from Aa2 ,highlighting further economic firmness.

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