Moody’s lowers Catalan Government’s long-term debt rating
The UK rating agency stresses that measures to cut public expenditure will have to be accelerated. The recent decision by the Catalan Government to issue bonds to obtain cash have influenced the agency. Moody’s is sticking to its short-term rating and lowers-down the long-term one. The Government will now have more difficulties in getting funding in international markets.
Madrid (ACN).- Moody’s, the UK rating agency, has lowered its long-term rating on the Catalan Government’s debt by one level, going from a A1 level to an A2 level. The agency justified the decision with the “increasing difficulties to get funding”. Moody’s believes that these difficulties are “a challenge” because of the Catalan Government’s “rigid” competences in health and education. The agency is keeping its short-term rating for the Catalan Government’s debt.
In its rating, Moody’s explains that the Catalan Government had to face a large deficit this year to fund its services. It also stresses the recent difficulties to get cash, which have brought the Government to issue treasury bonds to get funding from private citizens. In addition, the Government’s income has decreased because of a reduction of income from taxation. However, Moody’s acknowledges the initiatives that the Catalan Government has adopted to cut public expenditure and recommends pursuing the efforts in the direction taken. The austerity measures will have to be kept in 2011, according to the rating agency.