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DBRS assigns Luxembourg AAA currency ratings, notes limited diversification

DBRS assigned long- and short-term foreign- and local-currency issuer ratings of AAA/R-1 (high) to Luxembourg on Dec. 16, with a stable trend on all ratings.

The agency said the ratings reflect the country's sound public finances, its high degree of political stability and strong institutional quality, its wealthy and advanced economy, and its strong external position.

DBRS, however, acknowledged that despite these credit strengths, Luxembourg faces some challenges, including a limited degree of economic diversification, vulnerability to external shocks due to the large international financial sector and changes in tax frameworks.

The rating agency said the stable trend mirrors the strong fundamentals of the country's economy and its assessment that the challenges the country faces are manageable.