Moody’s Investors Service has downgraded the government of Mali’s foreign and local currency long-term issuer ratings to Caa1 from B3, and changed the outlook to negative from stable.
The decision to downgrade the ratings reflects Moody’s assessment that the ongoing military coup d’état represents a deterioration in institutional and governance strength and opens a period of heightened political instability and economic and financial stress. Sanctions already in place raise the risk that the government may not meet its debt obligations.
The negative outlook reflects Moody’s view that the current political situation remains fluid and could deteriorate further if the negotiations between the military junta and representatives of Mali’s civil society and neighbouring countries do not reach a rapid agreement about an inclusive transition allowing for a timely return to civilian rule. Additionally, the economic and financial sanctions imposed on Mali by the Economic Community of West African States (ECOWAS), if protracted, could severely impact the economy of the landlocked country and heighten the government’s liquidity risk, potentially resulting in missed debt payments.
Concurrently, Moody’s has lowered Mali’s foreign currency bond and deposit ceilings and the local currency bond and deposit ceilings to B1 from Ba3.