December 22, 2011 / 10:03 PM / 6 years ago

Moody's cuts Slovenia's credit rating one notch to A1

The logo of credit rating agency Moody's Investor Services is seen outside the office in Paris October 24, 2011.Philippe Wojazer

(Reuters) - Moody's Investors Service on Thursday cut the sovereign foreign currency credit rating for Slovenia one notch to A1 from Aa3, citing increasing pressure on the government's balance sheet that could arise from a potential need to further support the nation's banking system.

The outlook for the credit rating is negative, Moody's said in a statement. Slovenia is rated one notch higher, at AA-minus, by both Standard & Poor's and Fitch Ratings.

Moody's also said the downward pressure on the rating stems from a deterioration in government funding conditions due to the ongoing euro zone credit crisis.

Fitch Ratings last week said it had put Slovenia on watch for a possible downgrade, and expects to complete that review by the end of January.

Slovenia was the fastest growing euro zone member in 2007 but was badly hit by the 2008-2009 global crisis due to its dependency on exports. The economy shrank by 8 percent in 2009.

After a year of recovery, Slovenia's economy contracted by 0.5 percent in the third quarter of 2011 signaling another recession might be coming.

Reporting By Daniel Bases and Caryn Trokie; Editing by Chizu Nomiyama and Andrew Hay

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