Moody’s upgrades Pakistan’s ratings to ‘Caa2’

In a positive development, Moody’s Ratings has upgraded Pakistan’s long-term issuer rating from “Caa3” to “Caa2” with a stable outlook.

Moody’s said that this upgrade reflects Pakistan’s improved macroeconomic conditions and moderately better government external positions from very weak levels.

“We have also upgraded the rating for the senior unsecured MTN programme to (P)Caa2 from (P)Caa3. Concurrently, the outlook for Government of Pakistan is changed to positive from stable,” read the statement.

Accordingly, Pakistan’s default risk has been reduced to a level consistent with a Caa2 rating.

This upgrade follows Fitch Ratings’ decision in July to raise the country’s credit rating from “CCC” to “CCC+”.

Moreover, the rating agency expected the IMF Executive Board to approve the Pakistan loan deal in the next few weeks.

“There is now greater certainty on Pakistan’s sources of external financing, following the sovereign’s staff-level agreement with the IMF on 12 July 2024 for a 37-month Extended Fund Facility (EFF) of $7 billion.”

This year in July, Fitch Ratings had upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’.

“The upgrade reflects greater certainty over the continued availability of external funding, in the context of Pakistan’s staff-level agreement (SLA) with the IMF on a new 37-month USD7 billion Extended Fund Facility (EFF),” Fitch company said in a statement.