Moody's Investors Service downgraded bond ratings of the Tunisian government to Baa3 from Baa2, and changed its outlook to negative from stable – citing the country’s political instability amidst the ongoing chaos of street protests and change in regime.
Moody's reduced the country's foreign debt to Baa3 -- the lowest investment grade -- from Baa2, and warned further cuts were possible, given the worsening political situation in the North African country.
The current uncertainties about the economic and political consequences of the collapse of Tunisia's previous political regime are the main drivers for the decision to downgrade the government's bond ratings by one notch and assign a negative outlook, said Aurelien Mali from Moody's.
Moody's will closely monitor Tunisia's political risk and stability over the next few months, as a further outburst of violence and disorder could exert added negative pressure on the economy, he said.
Moody's added that it expects Tunisia to receive some form of external assistance from abroad, if necessary.
Tunisia’s stock markets were closed for a third straight day.