AMMAN: Moody's Investors Service has lowered the outlook on Jordan's Ba2 foreign currency government bond rating to negative from stable on concern that fiscal and economic downside risks related to ongoing turmoil in the region have risen following events in Tunisia and Egypt. The government's local currency bond rating was also lowered to Ba2 with a negative outlook from Baa3. Jordan does not display limited capital mobility. Nor is there evidence of a significant bias in the government's ability or willingness to service its debt in favor of local currency, Moody's said. This rating action also reflects higher fiscal and economic downside risks, it added. Jordan's local currency ceilings were downgraded to Baa1 from A3. "Moody's believes that rising political event risk has led to a moderate deterioration in the operating environment for businesses and other entities based in Jordan. The outlook on Jordan's foreign currency ceilings was changed to negative from stable." Moody's may also downgrade Jordan's Ba2 government ratings if there were disruptive political turmoil that threatened a structural weakening of Jordan's credit fundamentals relative to rating peers. This could include a deterioration in the balance of payments leading to a significant decline in official foreign exchange reserves or a sustained fiscal slippage that caused a jump in public debt, it said. Jordan's King Abdullah II last week sacked the government and appointed a new prime minister to push through reforms. The kingdom faces several chronic socio-economic challenges, including a high rate of unemployment.
