The authorities in the Republic of Latvia (A-/Stable/A-2) are targeting Jan. 1, 2008, as the date for adoption of the euro. The expectation of European Economic and Monetary Union (EMU) membership is an important factor behind the equalization of foreign and local currency ratings on Latvia, since eventual entry into the Eurozone will significantly reduce the sovereign's vulnerability to balance-of-payments pressures. Yet, inflation is currently running well above the Maastricht criterion for EMU convergence. Absent support for the ratings from other factors, if difficulties in meeting the inflation criterion were to delay Latvia's adoption of the euro substantially, this could slow rating improvements or give rise to downward pressure on the foreign currency ratings on the sovereign. Given that the...
Companies mentioned in this report are:
- Latvia (Republic of)
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues. SHOW LESS READ MORE >