Will Slovenia Sue Moody’s?

Slovenia is considering a possible lawsuit against the credit rating agency Moody’s, which drastically downgraded its credit rating amid government activities on issuing state bonds, Prime Minister Alenka Bratušek stated in an interview for the Maribor daily Večer on Saturday.

– We have considered legal action against Moody’s, and I am personally inclined towards that. They unjustifiably interfered in the process of issuing Slovenian state bonds, and no credit agency should do such a thing – said Bratušek.

By selling two bonds in US dollars, Slovenia managed to borrow 2.7 billion euros on the financial market at the beginning of May, offering an interest rate of six percent for the ten-year bond. However, the Ministry of Finance had to temporarily suspend activities on the bond issuance after Moody’s downgraded Slovenia’s credit rating by two levels.

On May 1, Moody’s downgraded Slovenia’s credit rating from Ba1 to Baa2, signaling to potential investors that Slovenian state debt has entered the ‘junk’ category due to problems in the Slovenian banking sector and an increased likelihood that Slovenia will need international financial assistance, which Prime Minister Alenka Bratušek persistently denies.

Before any possible legal actions, the Slovenian Ministry of Finance will seek clarification from Moody’s as they had contacted the agency before the roadshow for the bond issuance, but the possibility of a rating downgrade was not mentioned even once, said Bratušek, adding that had they known about this possibility, Slovenia would have temporarily withdrawn from the action.

Bratušek stated for “Večer” that media speculation is unfounded that the European Commission is dissatisfied with the program her government intends to stabilize public finances and restructure banks, and she expects Brussels to extend the deadline for reducing the budget deficit to below three percent of GDP, as some other countries have received such a delay.