COLOMBO, Sept. 12 (Xinhua) -- Moody's Ratings has downgraded the government of Maldives' long-term local and foreign currency issuer ratings from Caa1 to Caa2 and placed the ratings under review for a possible further downgrade, the rating agency said in a statement on Wednesday.
In the statement, the rating agency added that they have also downgraded the long-term foreign currency-backed senior unsecured rating for Maldives Sukuk Issuance Limited to Caa2 from Caa1, and placed the rating under review for further downgrade.
Moody's said that the decision to downgrade is driven by its assessment that default risks have risen materially, as foreign exchange reserves -- even inclusive of assets held in the sovereign development fund -- have remained low, with prospects for a sharp recovery relatively dim.
The rating agency added that time for accumulation of foreign exchange resources is narrowing, in light of significant external debt obligations coming due within the next 12-18 months.
While the government is working on securing some external financing, comprehensive financing to meet sizable forthcoming maturities remains uncertain and at the same time, large twin deficits compound pressures on reserves while implementation of much-needed fiscal reforms continues to see delays.
Meanwhile, Moody's lowered the Maldives' local and foreign currency ceilings to B2 and Caa1 from B1 and B3 respectively. ■