Moody’s Upgrades Mauritius From Baa2 to Baa1

 

Moody's Investors Service, a private credit rating agency has upgraded Mauritius' foreign and local currency government bond ratings to Baa1 from Baa2. According to the rating agency, the rationale behind the attribution of a Baa1 standard is mostly due to the country’s economic performance, resilience to shocks, the positive growth registered in recent years and Government’s significant progress in reducing its debt-servicing burden.

 

Moody’s has stated that the main driver behind the upgrading is specially the clear strengthening of the institutional framework, which has allowed the Mauritian economy to withstand the negative impact of both the financial crisis and the euro crisis. The agency further observes that aggressive countercyclical measures have kept the Mauritian economy growing even during the global recession in 2009.

 

Moody’s underlines that the second main driver is the progress being made in diversifying the Mauritian economy by encouraging Foreign Direct Investment (FDI) from multiple sources. Mauritius has also taken various steps, including the broadening of its economic cooperation with China and India, and the country is actively transitioning the economy from a comparatively low-skilled exporter to that of a highly-skilled service-based economy.

 

The renewed positive trend in Mauritius debt dynamics is the third main driver which has helped raised the Mauritian rating. Although both Mauritius’ affordability ratio and current debt stock still compare unfavorably with those of Baa-rated peer countries, Moody’s still remains cautiously confident that improvements in Mauritius debt dynamics are likely to continue.

Moody's Investors Service has also upgraded Mauritius’ foreign-currency ceilings for bonds and deposits to A2 from Baa1 and the country ceilings for local-currency debt and deposits have been adjusted to A1 from Aa2 to better capture the correlation between the government and other domestic entities.