Bloomberg News

Slovenian Credit Rating Cut to A by S&P on Banks, Political Risk

August 03, 2012

Slovenia had its sovereign credit rating lowered by one level by Standard and Poor’s, which cited political risks to the implementation of an economic overhaul and deteriorating asset quality at banks.

S&P cut Slovenia’s rating to A, five steps below the top investment grade, from A+, assigning a negative outlook that indicates it’s more inclined to cut its assessment further than raise it or leave it unchanged, according to a statement today. The grade is the same as Slovakia’s and one step above Poland’s.

“There are still significant policy implementation risks to planned budgetary, pension, health care, labor, and state administration reforms,” S&P said. “Coupled with growing asset quality problems in public- and private-sector banks, we believe policy implementation uncertainty has contributed to financial sector external funding contracting sharply, government funding costs increasing, and the domestic economy weakening.”

Slovenia may become the sixth euro-region member after Greece, Ireland, Portugal, Spain and Cyprus to require a rescue as the 17-nation currency area grapples with a deepening debt and banking crisis. Moody’s Investors Service cut Slovenia’s rating three levels yesterday to Baa2, two levels above investment grade, because of soaring funding costs.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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