On March 27, 2013, rating agency Standard & Poor's has affirmed sovereign credit rating on Bosnia and Herzegovina at „B with stable outlook".

RATING DETAILS

Pursuant to a formal decision of the Bosnia and Herzegovina's Counsel of Ministers, Bosnia and Herzegovina signed the contract for sovereign credit rating reporting and monitoring with two international credit rating agencies Moody's Investors Service and Standard & Poor's. On the behalf of Bosnia and Herzegovina, the contracts have been entered into by the BH Ministry of Finance and Treasury. The Central Bank of BH, in the capacity of a fiscal agent of the BH Ministry of Finance and Treasury, coordinates the BH sovereign credit rating reporting and monitoring.

Current BiH credit rating

Based on their analysis, on March 27, 2013, rating agency Standard & Poor's has affirmed sovereign credit rating on Bosnia and Herzegovina at „B with stable outlook". On July 2012 Moody's Investors Service has affirmed sovereign credit rating on Bosnia and Herzegovina at „B3" and removed the ratings from Credit Watch with negative implications to outlook stable. Overview of current sovereign credit rating of BH issued by both agencies is provided in Table 1 bellow.

Table 1: Current BH credit rating

Source: Moody's Investors Service, Standard & Poor's

Comparative review of credit ratings

Given that Moody's Investors Service and Standard & Poor's use different rating grading, Table 2 provides the comparative review of both sovereign credit ratings.

Credit ratings issued by both agencies distinguish between several categories relevant to credit rating and credit risk criteria graded using letters A through C, or D to that effect. Each credit rating category includes rating grades depending on the actual appraisal of the country's position, whether it is strong, average or rather poor. In so doing, to rate these specific grades the Moody's Investors Service uses numeric grades, while the Standard & Poor's uses plus (+) or minus (-) grades.

Both credit rating agencies provide outlooks in terms of trends that specific rating might report in future. Outlook is rated by using a descriptive rate, including positive, stabile, negative and developing outlook. Positive outlook means that a credit rating could be upgraded, stable means that a rating probably would not be changed, negative outlook means that a rating could be downgraded and developing outlook (contingent upon an event) means that a rating could be upgraded, downgraded or affirmed.

Table 2: Comparative review of rating grades

Source: Bloomberg, Moody's Investors Service, Standard & Poor's

Long-term sovereign credit rating for countries in the region

The international credit rating agencies rate ability of countries to timely repay its obligations and on the basis that they determine debt servicing ratings in both local currency and in foreign currency.

Table 3 shows the long-term foreign currency debt servicing ratings and the respective outlooks for the countries in the region which hired either one or both agencies (also hired by Bosnia and Herzegovina). This table effectively facilitates comparison and determination of our position relevant to countries in the wider region.

Table 3: Review of long-term sovereign credit rating for countries in the region

BH sovereign credit rating history

Moody's Investors Service was hired to asses the credit rating in 2003 and in 2004 Bosnia and Herzegovina received its first sovereign credit rating. Standard & Poor's was hired in 2008 and also issued the BH sovereign credit rating for that year. Both agencies have regularly monitored the Bosnia and Herzegovina's status. They in fact travel to BH at least once a year for a mission to directly talk to BH state and entity officials, representatives of BH institutions, representatives of international community in BH, businesspersons and academics with the view to get a comprehensive picture of the actual condition and outlooks of our country.

Bosnia and Herzegovina's sovereign credit rating history represents a review of all the ratings issued thus far. Based on their analysis and appraisals, both Moody's Investors Service and Standard & Poor's publish reports on Bosnia and Herzegovina. History the BH sovereign credit rating is provided in Tables 4 and 5 bellow.

Table 4: BH sovereign credit rating history - Moody's Investors Service

Source: Moody's Investors Service

Table 5: BH sovereign credit rating history - Standard & Poor's

Source: Standard & Poor's