Moody’s, one of the world’s leading credit rating agencies, has upgraded the Maldives' sovereign credit rating from "Caa2" to "Caa1."
In addition to the one-notch upgrade, the agency has also revised the country's outlook to "stable." Moody’s had previously downgraded the Maldives to "Caa2" on September 11, 2024, after maintaining a "Caa1" rating since the COVID-19 pandemic. The rating remained at "Caa2" during last year’s review.
With this change, the Maldives' credit rating has returned to the level it was at when the current administration took office. The reason cited for the upgrade is the reduced risk of a sovereign default following the successful settlement of sukuk payments.
However, Moody’s projected that the budget deficit will rise to eight percent this year. In its rating action, the agency further noted that the Maldives' debt-to-GDP ratio is unlikely to fall below 100 percent in the near future.
Despite the upgrade, the current rating continues to present challenges in securing financing from international markets. A "Caa1" rating remains classified within the "non-investment grade" or speculative category.
