Moody’s Investors Service downgraded Slovenia’s government bond rating on banking turmoil in the Eastern European country and the government’s heavy debt load.
The rating agency on Tuesday lowered the country’s rating into junk-grade status with a “Ba1” rating. The outlook remains negative — meaning it could face further downgrades in the near future.
Moody’s said the state of Slovenia’s banking sector, the deterioration of the government’s balance sheet and the probability that the country will need outside assistance factored into its move.
Slovenia entered a recession once again in 2012, and Moody’s expects the country’s economy will continue to contract this year before beginning a weak recovery in 2014.