Republic Of Belarus' Long-Term Foreign Currency Ratings Lowered To B From B+. Outlook Remains Negative

Standard & Poor's Ratings Services said today that it has lowered its long-term foreign currency ratings on the Republic of Belarus to 'B' from 'B+' and its long-term local currency ratings to 'B+' from 'BB'.

The short-term local and foreign currency ratings are affirmed at 'B'. The outlook on the long-term ratings is negative. The Transfer & Convertibility (T&C) assessment for Belarus has been changed to 'B'.

The recovery rating on Belarus' senior unsecured debt is unchanged at '4', indicating our expectation of a 30%-50% recovery of principal in the event of a default on Belarus' commercial debt. The estimate draws on a scenario--not a base case--of severely negative external financing trends that economic policies cannot offset.

"The rating actions reflect the country's heightened vulnerability to negative external financing trends because of the deterioration in usable reserves," Standard & Poor's credit analyst Ana Mates said.

The negative outlook reflects the likelihood of a downgrade if the country's external financing plans are impaired by a material increase in interest rates or by unanticipated impediments to securing external funding. The rating could stabilize at the current level if Belarus were to bolster its net international reserves. This would likely entail initiating reforms to strengthen external competitiveness.