Latvia’s Credit Rating May Be Upgraded by Moody’s, RBS Says

Latvia’s credit grade may be raised by Moody’s Investors Service after similar moves by the other two major ratings companies, Royal Bank of Scotland Plc said.

Moody’s may increase Latvia’s Baa3 rating from its lowest investment grade, Mohammed Kazmi, a London-based emerging-markets strategist at RBS, wrote today in an e-mailed note. Standard and Poor’s and Fitch Ratings both rate the Baltic nation one step higher after upgrades in the last week.

“The recent upgrades are likely to be followed by Moody’s, which requires Latvia to continue on its path of fiscal consolidation and progress toward single-currency membership,” Kazmi said.

Latvia’s credit ratings have been upgraded after government austerity measures in the wake of an economic crisis that erased almost a quarter of economic output in 2008-2009. Gross domestic product may advance by as much as 5 percent this year, Prime Minister Valdis Dombrovskis told Parliament today. Inflation slowed to a two-year low in October, bolstering plans to follow Estonia into the euro area in 2014.

The yield on Latvia’s dollar bond due 2021 fell one basis point to 3.39 percent as of 11:22 a.m. in Riga, the capital, data compiled by Bloomberg show. It fell to a low of 3.1911 percent on Oct. 18.

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