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Sovereign ratings wrap: S&P affirms US at AA+; Fitch cuts South Africa to BB

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Sovereign ratings wrap: S&P affirms US at AA+; Fitch cuts South Africa to BB

S&P Global Market Intelligence presents a summary of ratings actions on sovereigns and other key territories from March 30 to April 5.

EUROPE

* S&P Global Ratings affirmed Germany's unsolicited long- and short-term foreign- and local-currency sovereign credit ratings at AAA/A-1+, with a stable outlook. The rating agency said that while steps taken by the German government to contain the spread of COVID-19 will likely push the economy into a recession in 2020, fiscal stimulus measures will help prevent longer-lasting damage from the pandemic. Germany's public finances are well positioned to facilitate a strong policy response to counter the pandemic without deteriorating its sovereign creditworthiness, the agency also said.

* S&P Global Ratings also affirmed France's unsolicited sovereign credit ratings at AA/A-1+, with a stable outlook, reflecting expectations that the government's measures to counter the economic effects of COVID-19 have improved the country's capacity to face the current temporary shock. The agency expects France's GDP to contract 1.7% in 2020 before rebounding by about 3.2% the year after.

* Fitch Ratings affirmed Belgium's long- and short-term foreign- and local-currency issuer default ratings at AA-/F1+ and revised the outlook to negative from stable, reflecting its expectations of a substantial worsening in the country's public finances in 2020 due to the COVID-19 pandemic and its impact on economic activity. Fitch said Belgium is likely to emerge from the coronavirus crisis with a "significantly higher level" of private debt and may face challenges in consolidating its public finances over the medium term.

* Fitch affirmed Croatia's issuer default ratings at BBB-/F3 and lowered the outlook to stable from positive due to the coronavirus pandemic's blow to the country's tourism sector and wider economy.

* Fitch also affirmed Cyprus' ratings at BBB-/F3 and revised the outlook to stable from positive, reflecting the significant impact of the pandemic on the island's economy and fiscal position.

* Fitch affirmed Armenia's ratings at BB-/B and revised the outlook on the long-term ratings to negative from stable.

* S&P Global Ratings affirmed Belarus' sovereign credit ratings at B/B, with a stable outlook. The agency said Belarus should have enough foreign exchange reserves to meet its public debt payments over the next 12 months even if deteriorated financing conditions limit its access to the external commercial bond market.

* DBRS Morningstar confirmed Sweden's long- and short-term foreign- and local-currency issuer ratings at AAA/R-1 (high), with a stable trend on all ratings. DBRS expects the pandemic to lead to a "deep but transitory" impact on Sweden's economy and said the country has strong credit fundamentals that can withstand a deterioration in economic and fiscal metrics without weighing on its rating.

AMERICAS

* S&P Global Ratings affirmed the U.S.' unsolicited sovereign credit ratings at AA+/A-1+ and maintained a stable outlook, citing the economy's resilience amid the coronavirus pandemic. The rating agency said the Federal Reserve's institutional strength, independence and credibility give adequate monetary policy flexibility to the economy, which is also supported by diversity and its status as the issuer of the world's leading reserve currency. Ratings expects the U.S.' GDP to contract 1.3% in 2020, with downturns concentrated in the second and third quarters and a recovery in the fourth quarter, and said persistent economic measures regardless of the election outcome in November will limit the impact of the pandemic.

* Moody's downgraded Argentina's foreign- and local-currency long-term issuer and senior unsecured ratings to Ca from Caa2 and assigned a negative outlook, concluding a review for downgrade initiated Aug. 30, 2019. The rating agency expects the debt restructuring process initiated by the government to result in substantial losses to private creditors as the fallout from the coronavirus pandemic aggravates liquidity stress. Losses of more than 65% for debt holders and inconsistent with the rating could trigger a ratings downgrade, Moody's warned.

* Moody's also downgraded Ecuador's long-term foreign-currency issuer and senior unsecured rating to Caa3 from Caa1 and changed the outlook to negative from stable, citing the now very high probability of a restructuring, distressed exchange or default of the country's debt as the COVID-19 pandemic leads to extremely tight financing conditions. The negative outlook reflects the possibility that bondholders' potential losses could exceed levels consistent with a Caa3 rating.

* Fitch downgraded Colombia's ratings to BBB-/F3 from BBB/F2, with a negative outlook, over concerns that the country's fiscal metrics could weaken due to the economic downturn caused by a sharp fall in oil prices and efforts to contain the COVID-19 pandemic.

* Fitch downgraded Guatemala's long-term ratings to BB- from BB and revised the outlook to stable from negative, citing the country's declining fiscal flexibility due to low tax collection, as well as downward pressure on growth arising from the pandemic. The country's short-term ratings were affirmed at B.

* S&P Global Ratings downgraded Suriname's sovereign credit ratings to CCC+/C from B/B and changed the outlook to negative from stable, citing increasing financing challenges in the wake of the coronavirus pandemic and falling oil prices.

ASIA-PACIFIC

* S&P Global Ratings affirmed Japan's unsolicited sovereign credit ratings at A+/A-1, reflecting the country's strong external position, wealthy economy, political stability and "savings-rich" financial system, offset by very weak public finances that are exacerbated by an aging population and low inflation. The outlook remains positive, reflecting the agency's view that within the next one to two years, Japan will return to a fiscal trajectory that improves its government debt-to-GDP ratio.

* Moody's affirmed New Zealand's long-term issuer and senior unsecured ratings at Aaa, with a stable outlook, citing the country's strong governance and fiscal position as well as its wealthy and flexible economy. The affirmation reflects the rating agency's assessment that New Zealand's rating is resilient to shocks from the deteriorating global economic outlook amid the spread of the coronavirus outbreak and the decline in oil prices.

* Fitch downgraded the Maldives' long-term issuer default ratings to B from B+ and lowered the outlook to negative from stable, reflecting the agency's expectation that the country's economy will be significantly affected by the coronavirus pandemic, primarily in the tourism sector.

MIDDLE EAST AND AFRICA

* Fitch lowered South Africa's long-term issuer default ratings further into junk territory at BB from BB+ and affirmed the short-term ratings at B, citing the impact of the coronavirus crisis on the domestic economy and public finances, including government debt. South Africa's GDP is forecast to contract by 3.8% in 2020, resulting in the first decline in government revenues in nominal terms since 2009. The outlook on the ratings is negative, reflecting likely further pressure on government debt and risks associated with the global shock from the pandemic.

* Moody's placed Kuwait's Aa2 long-term issuer rating on review for downgrade to reflect the significant decline in government revenues due to plummeting oil prices and weak governance, heightening uncertainty over whether the country will be able to finance its borrowing needs in the next few years.

* Moody's also placed Oman's Ba2 issuer rating on review for downgrade, citing the country's increased external vulnerability and government liquidity risks after a significant slump in oil prices and the severe tightening in external financing conditions. The review placement comes less than a month after Moody's downgraded Oman's ratings from Ba1.

* Moody's placed Angola's B3 long-term issuer and senior unsecured ratings on review for downgrade, reflecting heightening pressure on the country's already weak fiscal and external metrics due to the sharp drop in oil prices and a significant tightening in global financing conditions. The country's short-term issuer rating was affirmed at Not Prime.

* Fitch downgraded Gabon's ratings to CCC/C from B/B, citing a significant increase in risks to the country's capacity to repay sovereign debt due to liquidity pressure from falling oil prices.

* Moody's downgraded Zambia's long-term issuer ratings to Ca from Caa2 and changed the outlook to stable from negative over the agency's view that the country's ability to service its debt has further weakened over the past year.

* Moody's affirmed Mauritius' long-term issuer rating at Baa1 and changed the outlook to negative from stable, citing expectations of slow economic growth, mainly due to a sharp decline in tourist arrivals caused by the coronavirus pandemic.

* S&P Global Ratings affirmed Morocco's ratings at BBB-/A-3, with a stable outlook, citing the country' macrofinancial stability in the near term in the face of COVID-19 and the agency's view that the adverse economic and budgetary impact of the pandemic will be contained without lasting and structural damage to credit metrics.

* Capital Intelligence Ratings lowered Bahrain's long-term foreign- and local-currency ratings to BB- from BB and affirmed the short-term ratings at B. The outlook for all ratings remains negative.

* S&P Global Ratings affirmed Saint Helena's ratings at BBB-/A-3, with a stable outlook.

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