Moody's downgrades Jordan's outlook to "negative" over unrest

10:06, February 09, 2011      

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Credit rating agency Moody's Investors Service on Tuesday downgraded the outlook on Jordan's Ba2 foreign currency government bond rating to "negative" from " stable" due to recent political tensions in the country.

Moody's said the rating reflected higher fiscal and economic downside risks related to the ongoing turmoil in Jordan and its neighboring countries.

"Moody's believes that rising political event risk has led to a moderate deterioration in the operating environment for businesses and other entities based in Jordan. The outlook on Jordan's foreign currency ceilings was changed to negative from stable," the agency said in a statement on its website.

It also downgraded the Jordanian government's local currency bond rating to Ba2 with a negative outlook from Baa3 and cut Jordan's local currency ceilings to Baa1 from A3, said the statement, of which one copy was obtained by Xinhua.

The credit agency warned it may downgrade Jordan's Ba2 government ratings "if there were disruptive political turmoil that threatened a structural weakening of Jordan's credit fundamentals relative to rating peers."

"This could include deterioration in the balance of payments leading to a significant decline in official foreign exchange reserves or a sustained fiscal slippage that caused a jump in public debt," it added.

Jordan suffers from a number of chronic socioeconomic challenges, including a high unemployment rate. Jordan's unemployment rate, officially reported to be 12.5 percent, is one of the highest rates in the region and similar to that of Tunisia, said the agency.

"Poverty is also reported to be widespread and corruption is perceived to be an issue. Moreover, over the past year, consumer price inflation has increased to around 6 percent in December," it added.

Moody's Investors Service, a provider of credit ratings, research, and risk analysis, tracks debt covering more than 110 countries, 12,000 corporate issuers, 25,000 public finance issuers, and 106,000 structured finance obligations, according to its website.

Source: Xinhua

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