Credit rating agency Moody's has downgraded Maldives' credit rating to Caa1 days after Fitch downgraded the rating to "CC".
Moody's downgraded Maldives to Caa1 because of high credit risk. This means Moody's rating is now at "non-investment" grade.
"The decision to downgrade is driven by our assessment that default risks have risen materially," Moody's said and placed the Maldives "on review" for a follow-up downgrade.
Moody's added that the country's "fragile external liquidity position will likely worsen further without near term financing" and that it has "significant external debt obligations coming due within the next 12-18 months."
Moody's last maintained Maldives' credit rating at Caa1 on June 27.
Meanwhile, rising public debt and difficulties in securing external financing were the main reasons cited by Fitch for their rating downgrade.
With large amounts due as debt repayments in the coming days, Fitch expected the government to reduce external financing requirements with fiscal reforms.
Following the credit downgrading by Moody's, the country will face serious difficulties in raising funds. It is expected that loans will be provided at a higher interest rate.
A low credit rating will also lower investor confidence in Maldives, making it more difficult to attract foreign investments.
