Moody's Investors Service has today downgraded the Republic of Gabon's government bond and issuer ratings to B1 from Ba3. The outlook is negative. This concludes the review for downgrade initiated on 4 March 2016 whose purpose was to assess the extent of the impact of the oil price shock on the government's balance sheet, the country's liquidity risk, and the credit support offered by its membership of the franc Zone.

Today's ratings downgrade reflects two key drivers:

(i) Moody's projects the government debt ratios to deteriorate further in 2016 and stabilise beyond that point to levels higher than those of Ba3-rated peers.

(ii) Concomitantly, higher government financing requirements and constrained financing options have increased the government liquidity risk.

Moody's continues to assess the Republic of Gabon's membership to the franc Zone as an important credit support. As a result, despite growing external imbalances and diminishing foreign exchange reserve levels, the rating downgrade is limited to one notch.

Concurrently, Moody's has lowered the Republic of Gabon's country and deposit ceilings to Ba1 from Baa3. The rating downgrade drove the change in ceilings.