Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereign, sub-sovereign and supranational issuers. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Finland (AA+/Stable; S-1+/Stable) on 25 June 2020. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Finland’s AA+ sovereign ratings reflect the country’s still robust public finances, underpinned by moderate government debt ratios despite significant increase in 2020, and high government debt affordability. The ECB’s ongoing purchases of government bonds and transfer of Finnish debt from the private sector to the Eurosystem balance sheet is a rating support – underpinning Finland’s strong market access. The ratings are anchored by the nation’s wealthy economy, highly educated labour force, enhancements in macro-prudential supervision, and improvements to the economy’s external competitiveness in recent years. These strengths are, however, counter-balanced by structural challenges, including an ageing population, which, coupled with labour market rigidities, weigh on growth potential and the medium-run sustainability of the social welfare system. 2020’s marked rise in government deficits and debt, annual current account deficits and high external debt are rating constraints, as are financial stability risks, including those arising from the size of the Finnish banking sector relative to the domestic economy.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Public Finance and Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.

This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.

Lead analyst: Dennis Shen, Director

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