Thomson Financial News Super Focus
November 30, 2007 Friday 6:19 AM GMT

Armenia ‘Ba2’ rating balances low debt burden with modest development
– Moody’s

Moody’s Investors Service said its stable outlook and ‘Ba2’ local and
foreign currency debt rating on Armenia balances the low debt burden
of the government and economy against the country’s weak
institutional capacity and modest level of economic development.

The ratings agency said Armenia’s ‘Baa3’ foreign currency country
ceiling rating for bonds are based on Moody’s assessment of a low
risk of payments moratorium in the event of a government bond
default.

While Armenia’s debt burden compares well with similarly rated
countries, as a relatively poor nation in the process of
transitioning to a market-based economy, its institutions are still
relatively undeveloped, Moody’s said.

Armenia’s general government debt burden — at about 17 pct of GDP
and falling — compares favourably with other ‘Ba2’-rated countries.
The terms of its debt are also very comfortable relative to its
peers, Moody’s said.

The country’s double-digit growth continues, at one of the fastest
rates registered in the world, reflecting the economy’s small size,
and the government’s fiscal and monetary policies are prudent,
Moody’s said.

However, links between Armenia’s political class and the business
elite foster entrenched vested interests, while the level of
financial intermediation remains low. There are also geopolitical
uncertainties linked to the conflict in the Nagorno-Karabach region,
Moody’s said.