Outperforming Honduras Cut to Congo by Moody’s on Deficit

Honduras’s credit rating was cut by Moody’s Investors Service after the Central American nation’s deficit surged last year and the government boosted sales of short-term domestic debt, Bloomberg News reported. Moody’s lowered Honduras’s credit rating to B3 from B2 today, putting the $18.4 billion economy in the same category as the Democratic Republic of Congo and Argentina. The move comes about one month after President Juan Orlando Hernandez took office vowing to tackle the deficit and as his finance minister seeks an accord with the International Monetary Fund. Hernandez’s efforts have helped make the country’s dollar bonds the best performing in emerging markets this year after Belize, according to JPMorgan Chase & Co.’s EMBIG index. “Despite the government’s original plans to consolidate public finances in 2013, the fiscal deficit widened to 7.7% of GDP in 2013 from 5.9% in 2012,” Moody’s said in a statement. “Since 2009, the government has issued significantly more debt in the domestic market, and this debt has an average maturity of just 2.6 years.” Read more.