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      Scope takes no action on Estonia
      FRIDAY, 02/07/2021 - Scope Ratings GmbH
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      Scope takes no action on Estonia

      No action has been taken on Estonia following a monitoring review.

      Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

      Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly-rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

      Scope completed the monitoring review for Estonia (AA-/Stable; S-1+/Stable) on 28 June 2021. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

      Key rating factors

      Estonia’s AA- rating is underpinned by i) a track record of prudent fiscal management anchoring low public debt levels; ii) strong institutions and commitment to a favourable business environment, underpinned by EU and euro area membership; and iii) improved resilience against external shocks, with net external liabilities declining over the past years. In addition, Estonia benefits from favourable debt financing conditions. Challenges relate to i) still lower per capita income levels relative to those of euro area peers combined with moderate productivity growth; and ii) limited economic diversification together with a large export sector relative to the small size of the economy, which exposes Estonia to external shocks.

      Scope expects broad policy continuity under the current government, including strong support for Estonia’s EU, euro area and NATO memberships, as well as a continued commitment to maintaining Estonia’s sound public finances following the pandemic.

      The Stable Outlook represents Scope’s view that risks to the ratings over the next 12 to 18 months are balanced. The ratings/Outlooks could be upgraded if, individually or collectively: i) a continued implementation of structural reforms, such as in the labour market, research and development, and infrastructure, drives a stronger growth outlook; and/or ii) there is a further sustained reduction in external vulnerabilities.

      Conversely, the ratings/Outlooks could be downgraded if, individually or collectively: i) the fiscal outlook deteriorates meaningfully; ii) risks in the financial sector escalate, increasing financial stability concerns; iii) external competitiveness declines weakening Estonia’s growth outlook; and/or iv) an external shock or heightened geopolitical risks undermine Estonia’s macro-economic stability.

      For the updated scorecards accompanying this review, click here.

      The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
      This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
      Lead analyst: Levon Kameryan, Senior Analyst

      © 2021 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. 

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