S&P affirms Slovenia’s A+ rating, maintains positive outlook

Standard and Poor’s affirmed Slovenia’s A+ sovereign credit rating and maintained its positive outlook, according to an official press release, published on Friday, December 14. The outlook is a reflection of the country’s rapidly falling government and external debt in addition to improving economic fundamentals. S&P argued the rating reflects Slovenia’s strong external performance, which has been mainly driven by the manufacturing sector in addition to sound fiscal results. Meanwhile, recent strong growth rates and high GDP per capita have also contributed along with the stability and effectiveness of institutions.

The rating agency expects that economic growth will moderate slightly, following a strong expansion this year, underpinned by solid external demand, which has been notably aided by the tourism sector. Meanwhile, S&P expects that private consumption should pick up next year, which would be supported by a looser fiscal stance. In terms of the country’s new government, the rating agency noted the cabinet consists of five parties with diverging policy outlooks, but it still expects broad continuity and an overall consensus. On the other hand, however, progress on structural reforms and privatization are expected to be slow.

Meanwhile, S&P also revised its outlook on NLB Bank, Slovenia’s largest bank, to positive from developing and affirmed its BB+ rating on it. The outlook revision followed the bank’s successful listing of 65% of formerly state-owned shares in November this year. The government is expected to sell further until it owns 25% plus one share as stipulated in its agreement with the European Commission. The rating action reflects NLB’s solid profitability, the reduction of NPLs and its successful restructuring.

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