Lasha Khutsishvili, the Minister of Finance of the "Dream" government, expects Georgia's sovereign credit rating to improve. He stated this during a podcast for "Bank Cartu.
"The Minister discussed the issuance of $500 million in Eurobonds by the Georgian government on the London Stock Exchange, noting that the process demonstrated investor confidence in the country's economy. He highlighted that investors assessed Georgia as less risky than other countries with similar ratings or even those rated one step higher.
"Several international financial companies noted that this was a very successful issuance because, among the sovereign bonds issued on the London Stock Exchange over the last four years by countries with ratings similar to or one notch higher than Georgia's, this had the lowest interest rate. This automatically means it represented the lowest risk level," said Lasha Khutsishvili.
When asked about a possible upgrade of the country's sovereign rating, Khutsishvili stated that according to the models used by international rating agencies, Georgia practically already holds an investment-grade rating, which suggests this will be reflected in actual assessments in the coming years.
"Naturally, when we talk about the country’s rating, it is important because, as a rule, the country's rating is also crucial for the assessment of any financial institution. When positive evaluations are made in this direction, it is reflected in financial institutions as well. We are working with all three rating companies in this regard. We have quite an interesting situation today with S&P, Moody's, and Fitch. If we look at their published assessments of Georgia's rating, we will see what the model says (the model these companies use to evaluate a country) versus the final score and assessment.
According to all three, the model suggests a higher rating than the actual published result. For Fitch and Moody’s, the model indicates a rating two steps higher, which is already an investment grade, while for S&P, it is one step higher. This gap between the actual and model-determined rating is gradually increasing across all agencies, which is naturally a step toward a rating upgrade at some point. Naturally, all factors affecting the country's rating have significantly improved over the last 3-4 years. Of course, general geopolitical risks remains the main hindering circumstance—linked not only to our region but to the whole world, though more acutely felt in our region. However, the successes the country has achieved in other criteria partially cover these risks.
It is also very good that various risks previously cited by rating companies did not materialize, which will consequently help improve the country's rating. An improved rating for the country means a higher rating for the private sector in Georgia, which ultimately means cheaper and more easily accessible resources for companies from international or local markets. This, of course, means more competitive advantages for Georgian businesses and for the state as well. We are continuing to work very actively in this direction. It is quite difficult to name specific deadlines because this assessment is very complex and includes many factors; however, the rating agencies' models say that Georgia practically already has an investment rating. This assessment allows us to assume that we should see positive dynamics in terms of ratings over the coming years," said Lasha Khutsishvili.
According to S&P, Moody's, and Fitch, Georgia currently holds a non-investment (speculative) rating. This month, the international credit agency S&P Global left Georgia's sovereign rating unchanged at 'BB' with a stable outlook. The agency points out that domestic politics in Georgia remains polarized and relations with the US and the EU are becoming complicated due to a range of factors. This is the very factor that could potentially lead to a rating downgrade—specifically if political tension escalates to the point that investor confidence is shaken and Georgia's growth prospects weaken.
