What does it mean to say that Moody's have downgraded Malta from A2 to A3 with a negative outlook?
To put things in perspective I give hereunder a table of the investment grade rating for long term bonds by the three main rating agencies i.e Moody's, S & P and Fitch.:
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So Malta's rating is now down from the 6th to the 7th step from the top ranking triple A and three steps away from losing its investment grade rating.
Somebody commanding an A3/A- rating is defined as:
a borrower that has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bond issuers in higher-rated categories
Considering that Malta was downgraded with several other Euro countries the negative implications are less serious than if it were downgraded on its own as it indicates that on a relative basis we have nor fared worse than peers. What annoys me is the negative outlook as it is a signal for more downgrades to come.