Moody's Investors Service has today changed the outlook on the Government of Mauritius's rating to negative from stable. Concurrently, Moody's has affirmed the Baa1 long-term issuer rating.
The negative outlook reflects risks to Mauritius's economic and fiscal metrics as a result of the coronavirus outbreak. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. For Mauritius, the shock mainly transmits through the sharp decline and potentially prolonged slump in the tourism industry, which represents a relatively sizable proportion of gross value added in the economy as well as a source of government revenue and export earnings. Materially lower growth, combined with higher fiscal deficits could lead to a permanently higher debt and interest burden that is already elevated relative to Baa1 peers. The coronavirus and slower global growth could also reduce foreign direct investment into Mauritius, weighing on its external accounts and potentially result in a drawdown on international reserves.
Moody's decision to affirm the Baa1 rating takes into account Mauritius's strong governance and policy effectiveness, which have supported strong economic growth and provides a degree of resilience to economic shocks.
Mauritius's local currency bond and deposit ceilings remain unchanged at A1. The A2/P-2 country ceiling for foreign currency debt and Baa1/P-2 ceiling for foreign currency bank deposits also remain unchanged. These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country.
