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 of an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Slovak Republic (A+/Negative; S-1+/Negative) on 20 January 2021, 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

Slovakia’s A+ rating is underpinned by i) a track record of credible macroeconomic policies, supported by the country’s EU and euro area memberships, the latter conferring advantages via a strong reserve currency and eligibility to the asset purchase facilities of the European Central Bank; ii) still moderate levels of general government debt, supported by a credible constitutional budgetary framework; and iii) strong economic fundamentals and a competitive industrial base, anchored by FDI inflows. Scope expects the current government to support a pro-Western and pro-EU policy stance, and prioritise judicial and anti-corruption reforms.

The Negative Outlook reflects i) Slovakia’s external vulnerabilities, stemming from the economy’s high exposure to international value chains and high degree of reliance on its car industry, which is subject to uncertainty relating to the external demand alongside potential risks from structural changes to the sector; and ii) the significant GDP contraction in 2020 and associated deterioration in the country’s fiscal dynamics, exacerbated by a sharp widening in budget deficits due to higher spending needs in the near-term due to the coronavirus shock.

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: Levon Kameryan, Analyst.

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