Moody's revised its outlook on the Republic of the Congo's issuer ratings to stable from negative while affirming the Caa2 ratings, citing its expectation that negotiations to restructure the government's debt would not trigger a default.

The rating agency said the government's efforts to restructure its debt, which stood at an estimated 125% of GDP as of the end of 2017, are unlikely to involve market debt owed to private creditors. A default under Moody's definition involves losses to private creditors on their market debt.

However, Moody's noted that material default risks to private creditors still exist due to persistent significant credit challenges, including a tight liquidity position and deficiencies in debt management.

"In Moody's view, the most likely scenario going forward is for the government to restructure varying outstanding debts but to leave out of scope market debts issued both regionally in the Economic and Monetary Union of Central Africa (CEMAC) and internationally (ROC's outstanding Eurobond)," the agency said. Moody's expects the restructuring process to focus on both official sector debt and debt to trading houses.

The agency said it could raise the rating if financing constraints are mitigated and the government debt burden seems likely to decrease. Conversely, it could lower the rating if government debt increases or already-weak indicators of institutional capacity to manage the debt deteriorate further.