The region's rating
The region’s international rating by Moody’s Investors Service is A1 with a negative outlook.
The rating is an independent evaluation of the subject’s ability and will to fulfil future commitments, which is important particularly for rating the client’s creditworthiness when procuring external resources.
The granted ranting also fulfils the obligations stipulated by the credit agreement, which the region has concluded with the European Investment Bank.
Based on a regular yearly re-assessment of the region’s international rating, which took place this April, the agency issued an updated analysis of 5 May 2022, which indicates that the region has retained is A1 rating with a stable outlook. As a result of current developments, which led to a downgrade of the Czech Republic’s outlook rating from stable to negative on 5 August 2022 (with the current rating of Aa3 retained), the region’s outlook rating was also amended from stable to negative on 15 August 2022, with the current rating of A1 retained.
One of the primary reasons for the change in Czechia’s rating is the increased risk of long-term severe gas supply disruptions from Russia, which could lead to a rationing system and push the Czech economy into a deep recession with further downstream negative consequences.
The negative outlook on the region’s credit rating reflects the negative outlook on the Czech Republic’s credit rating and the close links between the region’s financial performance and the performance of the national economy; notably, the links of the region’s budget to government transfers (taxes and subsidies), whose decline could have a negative impact on the region’s budget due to a possible recession.
The continued conservative style of managing the region’s finances, in particular the maintenance of low regional debt, continued good operating results and high cash reserves, influences the retention of the A1 rating.
The Moody’s Investors Service rating agency has been awarding international ratings to the Moravian-Silesian Region since 2005. In this period, the rating has gradually improved from A3 to the current A1.
The Moravian-Silesian Region thus has the highest possible credit rating in the currently defined model for financing of regions in the Czech Republic.
The Moravian-Silesian Region closed 2018 with a very favourable economic result once again.
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