Dhaka, Bangladesh (BBN) – The top global rating agency Moody’s Investors Service has reassessed Bangladesh’s rating unchanged at Ba3, which would boost foreign investors’ confidence to invest in the South Asian country.
“Bangladesh’s Ba3 sovereign rating reflects our methodological assessment of economic strength that balances a medium-sized, but relatively narrow and low-income economy against a track record of steady growth, macroeconomic balance, and policy stability,” the Moody’s said in its disclosures on credit rating of Bangladesh.
The overall economic performance of Bangladesh has also been supported by large remittance inflows and the role of local micro-finance institutions, the Moody’s report, which was posted on its website on Saturday last, said.
“It’s a continuity of our previous rating reports. It will boost foreign investors’ confidence further to invest in Bangladesh,” a senior official of the Bangladesh Bank (BB), the country’s central bank, said, adding that this rating has put Bangladesh in a comfortable position.
Like 2012, Moody’s gave Bangladesh Ba3 rating in 2010 and 2011 for long-term issuers (domestic and foreign currency). For short-term issuers, it rated ‘Not Prime’ meaning that it does not fall within any of the prime rating categories.
The report also said this release does not constitute any change in Moody’s ratings or rating rationale for Bangladesh.
Sovereign credit rating is an important tool for positioning Bangladesh in the global financial arena by providing relevant information and related indicators about its overall economic situation, experts said.
The Moody’s last rating action on Bangladesh was on April 18, 2011, when its rating of long-term domestic and foreign currency issuer was put at a Ba3, with a stable outlook.
Moody’s rating has put Bangladesh on a par with the Philippines. In the South Asian context, Bangladesh’s position is three-step ahead of Pakistan and one-step higher than that of Sri Lanka, but below that of India.
“The former has underpinned an improvement in the country’s balance of payments, and the latter has heightened financial inclusion and established a critical social safety net that offsets the vagaries of a subsistence level per-capita income,” the rating agency said.
The country’s moderate degree of financial robustness reflects a comfortable external payments position, it said, adding that it also reflects a steadily declining general government debt burden.
“…the country’s relatively high savings and small public-sector cash balances in the banking system alleviate credit concerns pertaining to debt rollover risks,” the Moody’s said.
The global credit rating agency said the country’s fiscal flexibility and debt affordability are weaker than its rating peers.
“Moreover, the improving onshore finance-ability of government deficits is increasingly offsetting exchange rate risks of the government debt stock,” the Moody’s said.
“….event risks — that could be derived from abrupt political regime changes, policy shifts or economic and banking structure risks — are regarded as low and unlikely to result in a sudden or outsized deterioration in sovereign credit-metrics,” the report added.
BBN/SSR/AD-31Jan12-11:59 pm (BST)