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 Estonia (AA-/Stable; S-1+/Stable) on 4 August 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

Estonia’s AA- rating is underpinned by i) low public debt levels supported by its prudent fiscal management; ii) EU and euro area membership, strong governance and commitment to favourable business environment; and iii) improved resilience against external shocks, with falling levels of net external liabilities. The government adopted a large fiscal package to mitigate adverse economic effects from the Covid-19 shock, which alongside the cyclical fiscal deterioration will cause the general government debt-to-GDP ratio to increase, nevertheless remaining the lowest across the EU-27. In addition, Estonia benefits from favourable financing conditions. However, still moderate per capita income levels relative to those of euro area peers, a large export sector relative to the small size of the economy, which exposes Estonia to shocks, such as the Covid-19, and moderate productivity growth remain challenges.

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: Levon Kameryan, Analyst

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