While the Covid-19 era has led to hikes in public debt across the board among south-east Asian nations, as governments primed their economies and provided relief packages during the lockdowns and resulting slowdowns, only Laos suffered a sovereign credit rating downgrade in the region during the two-year period.
In August 2020, Moody’s downgraded its sovereign rating for Laos to Caa2 with a negative outlook, a rating that heralds a high likelihood of default on outstanding debts. This was followed by Fitch Ratings’ downgrade in September 2020 from B– to CCC. Ironically, both international credit rating agencies had been brought in to help the Ministry of Finance Laos (MOFL) extend its bond reach to international markets. Instead, the downgrades have made bond issuances that much more difficult and interest rates that much higher in the years ahead.
