Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. 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/ies, 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 the Republic of Finland (AA+/Stable; S-1+/Stable) on 10 December 2020, incorporating the update from the sovereign methodology. The review resulted in no action on the assigned ratings. 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 ratings history can be found on www.scoperatings.com.

Key rating factors

Finland’s long-term ratings of AA+/Stable are underpinned by the following credit strengths: i) the sovereign’s sound public finances and high government debt affordability, with fiscal sustainability moreover anchored by ECB support in secondary debt markets and the government’s net public asset position, ii) the nation’s wealthy economy and highly-educated labour force, iii) enhancements in macro-prudential supervision, and iv) improvements to the economy’s external competitiveness in recent years. These factors increase the country’s resilience to economic and financial system shocks and ensure the government has the fiscal space to enact countercyclical fiscal policies and adopt investments to raise long-run growth potential. Challenges relate to: i) the increase in debt over the 2020 crisis and downturn in the economy, even though Finland has been comparatively resilient, ii) an ageing population, which, coupled with labour market rigidities, weighs on growth potential and medium-run social spending, iii) current account deficits and high external debt, which leave the county more vulnerable to external shocks, and iv) financial stability risk, including that arising from the size of the Finnish banking sector relative to that of the domestic economy.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 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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