The international credit rating agency Moody's has upgraded the ceilings for 70 countries, including Bulgaria, Croatia, Poland and Kazakhstan among other emerging markets, as a result of implementing a new approach to assessment of foreign currency debt service capacities. The changes apply to countries rated below Aaa. No downgrades are reported as a result of the revised methodology.

The credit ceiling for Bulgaria has been raised to A1 from Baa3 for long-term instruments; Poland’s rating was upgraded to Aa1 from A2. The outlook remains stable for both countries. Similarly, the credit ceiling for Russia has been raised to A2 from Baa2 for long-term instruments. Croatia’s rating ceiling was raised by five notches from Baa3 to A1, also with a stable outlook. The short-term foreign-currency rating ceiling for bonds was also raised, from Prime-3 to Prime-1.

The methodology change did not affect the government bond ratings or foreign-currency ceilings for bank deposits.

Moody's has published a special report explaining the changes in the new assessment noting that a foreign currency bond default by a government will be no longer treated as a moratorium on all external payments affecting issuers in the country. In evaluating the probability of a moratorium, Moody’s said it took into consideration the extent to which the country’s economy was integrated into the global one, and whether the government would perceive a moratorium as more costly than other options in case of foreign payment crisis. The rating agency said the revised sovereign ceilings might bring about an upgrade of non-government issuers.

The new system implies that some corporate issuers could be upgraded above the government rating position as a result of the improved credit ceiling.

For instance, in Kazakhstan, the rating of Food Contract Corporation was raised from Baa3 to Baa2, and the outlook was changed to stable from under review for upgrade. KazTransGas and KazTransOil ratings were upgraded from Baa3 to Baa2, with their outlooks changed to stable. The former company’s senior foreign currency unsecured debt rating was affirmed at Baa2 with a stable outlook. Kazakhstan Electricity Grid Operating Company was upgraded from Baa3 to Baa1 with a stable outlook. Railway carrier Kazakhstan Temir Zholy’s foreign currency issuer rating was upgraded to Baa1 from Baa3 with its outlook under review for possible upgrade, while the domestic currency rating was affirmed at A3 with a stable outlook.