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Latvia's Credit Ratings

Moody’s, Standard and Poor’s and Fitch Ratings are rating services whose opinions can affect investors’ views of a country’s financial condition.


On August 11, 2003 Moody’s reported that Latvia has stable A2 rating supported by ongoing EU integration, strengthened financial system, and manageable government debt. This rating under the Moody’s definition means the following: ‘obligations rated A are considered upper-medium grade and are subject to low credit risk’, ‘the modifier 2 indicates a mid-range ranking’.

In 2007, inflation in Latvia hit all the records, and reached 10.1 per cent. In connection to this, Moody’s lowered the rating outlook for Latvia from positive to stable. The rating agency said in its press release that ‘large-scale foreign borrowing by the private sector has fuelled household consumption and investment in property, which have been the primary drivers of economic growth over the past few years’, … ’The rating agency believes that property markets are exhibiting bubble-like characteristics, although prices have started to decline. Current account deficits, as a percentage of GDP, are now amongst the highest in the world.’’

In November 2008, Moody’s Investors Service lowered a credit rating of promissory notes of the government of Latvia from A2 to A3. The rating of bonds in a foreign currency remained at level Aa1, but the forecast on them changed to negative.

During several months of 2009, Moody’s downgraded Latvia’s sovereign credit rating by five notches. In April 2009, Latvia, with the worst contraction in the 27-nation European Union in the fourth quarter of the year, was cut from Baa1 to Baa3 with a negative outlook. Also, Kenneth Orchard, vice president and senior Analyst in Moody’s Sovereign Risk Group said in the press release that ‘The depth and pace of the economic adjustment is much more severe than previously anticipated’ for Latvia.

In March 2010, the leading Moody’s Investors Service raised up the rating of the country’s creditworthiness. Latvia’s rating of Baa3 was revised from negative to stable, according to a press release issued by Moody’s London office.

Fitch IBCA

On November 4, 2003, the London-based Fitch assigned a Long-term rating of BBB+ to Latvia. The rating Outlook was Positive.

On July 23, 2003 Fitch assigned a Long-term local currency rating of A to Latvia. The rating Outlook was Stable.

The world financial crisis has substantially and quite negatively influenced the developing countries which are opened for the large financial organizations and do not have their own considerable reserves. In October 2009, rating agency Fitch lowered the rating of all Baltic countries. The rating of Latvia has been lowered with ‘BBB +’ to ‘BBB’.

In September 2010, having found some encouraging improvements in Latvia’s economy, Fitch has revised its outlook for the country’s creditworthiness from negative to stable.

In March 2011, the international credit rating agency raised Latvia’s rating outlook to positive, the country being rated at ‘BBB-’. Latvia’s long-term foreign currency deposit rating was raised from ‘BBB-’ to ‘BBB’, and short-term foreign currency deposit rating was raised from ‘B’ to ‘F3’. Fitch said that Latvia has made a considerable progress in its recovery from the financial crisis.

The rating of the country is still influenced by Latvia’s poor foreign financing, fiscal deficit and foreign debt reduce, but it might be further upgraded.

Follow the link to read about Fitchs International Long-Term Credit Ratings definitions.


On April 13, 2004, Standard & Poor’s reported its assessment of the risk of the sovereign or central bank imposing foreign exchange controls on non-sovereign borrowers in Latvia(as well as Estonia, Lithuania and Slovenia) expected to join EMU by 2008. The revised assessment will allow non-sovereign ratings in Latvia to reach the ’AA’ category without concern for transfer and convertibility risk, which previously might have kept the foreign currency rating on such issuers below the local currency rating. As a result, the highest long-term foreign currency rating that a non-sovereign debtor can generally achieve in Latvia has been raised to ’AA’ from the current level of ’A+’, in place since 2002.

Under Standard&Poor’s definition BBB rating means that obligor has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. The rating is modified by the addition of a plus sign (+) to show relative standing within the major rating categories.

In February 2009, Standard & Poor’s lowered Latvia’s rating to junk, prompting the central bank to buy 28.4 million lats to defend the currency. The downgrade had weakened the lats to its limit, forcing policy makers to defend the currency, the first such intervention since the country signed its loan agreement with the IMF in December.

In March 2011, S&P’s Ratings Services revised its outlook on Latvia’s ratings from stable to positive, and affirmed its BVB+ long-term and B short-term rating on Latvia. The agency noted that the Latvian economy is recovering fast, and projected a moderate current account deficit for Latvia. Standard & Poor’s said in the report that in 2010 Latvia’s exports were approaching the pre-crisis level of 2008, and that in 2010 the economic growth was faster than in 2009.

Related links: Moody’s; Fitch IBCA; Standard&Poor’s.