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Investing.com -- Moody’s Ratings has confirmed the Government of Austria’s long-term issuer and senior unsecured ratings, both in local and foreign currency, at Aa1. The ratings agency also affirmed the long-term senior unsecured MTN programme ratings at (P)Aa1, along with short-term commercial paper ratings at Prime-1, and other short-term ratings at (P)Prime-1, both in local and foreign currency. The outlook for these ratings remains stable.
The affirmation of these ratings is attributed to Austria’s wealthy and diversified economy, and its strong debt affordability, which Moody’s believes continue to bolster its creditworthiness. However, the country’s credit strengths are offset by relatively weak trend GDP growth and a high government debt burden.
The stable outlook reflects Moody’s anticipation that future governments will effectively carry out fiscal consolidation measures. These measures are expected to significantly lower Austria’s fiscal deficits and enhance the government’s debt trajectory over the medium term. The agency also anticipates the development and execution of structural reforms aimed at boosting competitiveness and enhancing the long-term sustainability of public finances, considering the aging population.
Moody’s has kept Austria’s local and foreign currency country ceilings at Aaa. For countries in the euro area, a six-notch gap between the local-currency ceiling and the local-currency rating is typical. In Austria’s case, this gap is one-notch, which raises the ceiling to the maximum level of Aaa. There is also a zero-notch gap between the local-currency ceiling and the foreign-currency ceiling. This reflects the advantages derived from the euro area’s robust common institutional, legal, and regulatory framework, as well as liquidity support and other crisis management mechanisms. It is consistent with Moody’s view of the minimal risk of exit from the euro area.
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