“Slovenia’s credit rating was cut to A- as the government’s announced support for state-owned banks will lead to higher-than-previously forecast debt, Standard & Poor’s said.
The rating was reduced from A, S&P said in a statement late yesterday. The outlook on the nation’s long-term rating is stable. The A- assessment is on a par with Poland and Malaysia.
“The downgrade reflects Slovenia’s higher-than-anticipated debt burden, due to its announced support of its state-owned banks,” S&P said in the statement. “We also observe rising policy-implementation risks to resolving economic and fiscal pressures.”
Slovenia, on the brink of becoming the sixth euro member to ask for a bailout, has drafted a 4 billion-euro ($5.4 billion) bank recapitalization plan that would take up bad loans from ailing lenders. The proposal may be derailed by early elections as a political crisis deepens over corruption allegations against Prime Minister Janez Jansa.
The yield on the nation’s dollar-denominated debt maturing in 2022 dropped 9 basis points from yesterday to 5.049 percent at 12:33 p.m. in Ljubljana, according to data compiled by Bloomberg.
