Moody’s upgrades Pakistan’s rating to Caa2; changes outlook to positive

Global rating agency Moody’s on Wednesday upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3. The international rating agency — one of the top three global rating firms — said its decision to upgrade was due to “Pakistan’s improving macroeconomic conditions and moderately better government liquidity and external positions, from very weak levels”. “Accordingly, Pakistan’s default risk has reduced to a level consistent with a Caa2 rating,” it said in a note, adding that there was now “greater certainty” on the country’s sources of external financing following the staff-level agreement with the International Monetary Fund (IMF) in July for an extended fund facility (EFF) of $7 billion.