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Standard & Poor's lowered the sovereign ratings of the Baltic nations Estonia and Latvia on Monday and placed Lithuania's rating for possible downgrade.
The agency lowered Latvia's long-term sovereign credit rating to 'BB' from 'BB+', with a negative outlook. The current rating is two notches below investment grade. The rating agency said the decision reflects the political and economic challenges facing the Latvian economy, as also the contracting nominal real and nominal incomes and the associated pressures on public finance.
At the same time, S&P downgraded Estonia's sovereign rating to 'A minus' from 'A', with a negative outlook.
Commenting on the rating decision by the rating agency, the Estonian Central Bank Deputy Governor Märten Ross said, "The agency's assessment reflects a view to the risks present on the financial markets, including in this region, which stem from the global economic crisis".
The agency indicated that the negative outlook reflect risks arising from the economic situation of Estonia's neighboring countries and main trading partners. The firm also said the postponement of join the euro may affect the country's sovereign ratings.
Meanwhile, S&P placed Lithuania's ratings on watch for possible downgrade. The country holds a BBB rating, slightly above junk status.
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