S&P Global kept Finland’s credit rating unchanged

Credit scorer S&P Global keeps Finland’s AA+ credit rating unchanged. At the same time, S&P also assesses the outlook for the Finnish economy as stable.

S&P announced Finland’s credit rating on Friday evening. It turns out Treasury from the pages.

S&P predicts that the growth of the Finnish economy will continue to be slow during the current year. However, it estimates that the economic outlook will pick up next year. The company predicts that economic growth in Finland for the years 2025–2027 will be 1.2 percent on average.

According to S&P, growth can still be limited by both weak productivity growth and weak employment development. The company states that the Finnish economy is also critically dependent on the development of the German economy.

S&P Global expects the government to succeed in balancing the public finances so that the deficit is reduced to around two percent by 2027.

The credit rating agency points out that it is ready to consider downgrading the credit rating in the next two years if Finland’s economic growth remains slower than expected.

In August another credit rating company, Fitch, which evaluates Finland’s credit rating, changed Finland’s outlook to negative. However, Fitch kept its AA+ credit rating for Finland unchanged.

Managing director of pension company Varma Risto Murto for otakus in August, that after Fitch, “at least some credit rating agency will lower Finland’s credit rating”.

In the eyes of credit rating agencies, Finland has always belonged to the best A group.

S&P lowered Finland’s credit rating from the highest three-A category to its current level of AA category in 2014. Fitch kept Finland in the AAA category until 2016, when it also downgraded the rating a notch.

Credit rating the bill has no direct connection to the interest rates on government bonds. A decrease or an increase in the rating does not necessarily raise or lower interest rates in itself

This is largely explained by the fact that changes in credit ratings are relatively easy to predict. The market has therefore been able to price the change in government bond interest rates even before the credit rating agency announces it.

On Friday, the Finnish government 10-year bond interest rate was the same as Thursday, 2.75 percent. The interest rate was at its highest this week on Tuesday, when it was 2.81 percent.

The importance of the credit rating lies in the fact that without it, the state’s conditions for obtaining financing are completely dry.

A good credit rating, on the other hand, guarantees the state a favorable position on the bond market. For example, some institutional investors invest only in bonds classified as low risk.