Analytics, Estonia, Financial Services, Investments, Rating

The agency said that the drivers of the rating action are the government's strong balance sheet, as indicated by its very low level of indebtedness; the resilience of Estonia's economy, which supports further income convergence towards the European Union (EU) average; and the government's strong institutions, which safeguard the country's credit fundamentals through the economic cycle.

The stable outlook on the rating incorporates Moody’s assumption that policies that support the country's fiscal position and economic resilience will be maintained, but that the overall pace of economic reform, which underpinned the rapid return to growth after the financial crisis, will slow going forward. It also recognizes Estonia's resilience to shocks emanating from Russia's (Ba1 negative) economic contraction.

Estonia's local and foreign-currency ceilings are unchanged at Aaa. The short-term foreign currency bond and deposit ceilings are also unaffected by this rating action and remain at P-1.