March 15 (Bloomberg) -- Latvia’s credit rating was raised one level to Baa2 by Moody’s Investors Service, as the Baltic country’s economy recovered and the government reduced the budget deficit.
The rating was lifted from Baa3, which is the lowest investment grade, Moody’s said in a statement. The upgrade puts Latvia on par with Brazil, Italy and Bulgaria. The outlook is positive, as the country’s potential adoption of the euro will shield it from external shocks, the rating company said.
“Growth has been resilient to the euro area crisis,” analyst Alpona Banerji wrote in the statement. “The second driver supporting the upgrade is the increased resilience of Latvia’s public finances.”
Latvia, which is seeking to become the 18th country to adopt the euro, expanded at an average 5.5 percent over the past two years, according to Moody’s. The government cut the budget deficit to 1.5 percent of gross domestic product last year, from 9.7 percent in 2009, it said.
The yield on Latvia’s government bonds due 2018 fell 5 basis point, or 0.05 percentage point to 1.93 percent by 4:37 p.m. in New York. It has plummeted from 4.15 percent a year ago.
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