Moody’s raises credit outlook for Cuba as Venezuela influence wanes

Moody's raises credit outlook for Cuba as Venezuela influence wanes

Rating agency changes position on Cuba from stable to positive
Moody's projects economic growth on the island to be 3.5% this year
Moody's is the only global credit rating company to grade Cuba
BY EDUARDO THOMSON
Bloomberg

Cuba's future is looking up as its relationship with the U.S. warms even
as flows of Venezuelan cash decline, Moody's Investors Service said.

The credit-rating company, while affirming the country's Caa2 rating,
raised the outlook on Thursday to positive from stable, citing a
diversification of trade and financial links after Venezuela cut
financial aid. The current rating places Cuba eight steps below
investment grade.

Venezuela has been scaling back its role in Cuba as crude oil prices
have tumbled, causing the island nation's growth to slow to 1 percent
last year from 2.7 percent in 2013. It marks a reversal of policies
forged by former Venezuelan President Hugo Chavez, who sought to counter
U.S. influence in the region. For years, Venezuela has subsidized oil
prices in Cuba, while the island has sent scores of doctors to work for
its foreign benefactor.

"Despite pressure on Cuba's external finances from lower economic and
financial support from its main trade partner, risks remain manageable,"
Moody's analysts Jaime Reusche and Anne Van Praagh said in the statement.

At the same time, more U.S. tourists are visiting Cuba after the Obama
administration formally resumed diplomatic relations in July. That
prompted Moody's to boost its forecasts for economic growth to 3.5
percent this year, from a previous estimate of 2.3 percent, Moody's
said. The economy will probably expand 3 percent in 2016, it said.
Economists surveyed by Bloomberg expect the U.S. to grow 2.5 percent
this year and next.

Moody's is the only global credit rating company to assign grades to
Cuba. Further easing of U.S. restrictions, in place since the 1960s,
could lead to an upgrade of the rating, Moody's said.

Moody's last changed Cuba's rating in April 2014, when it lowered the
grade one notch from Caa1, according to data compiled by Bloomberg.

Source: Moody's raises credit outlook for Cuba as Venezuela influence
wanes | Miami Herald -
http://www.miamiherald.com/news/nation-world/world/americas/cuba/article49099910.html