S&P Global has assigned its 'B+/B' long- and short-term foreign and local currency sovereign credit ratings to the Kyrgyz Republic, with a stable outlook.

The credit rating puts the country on par with states including Rwanda, Bangladesh and Nicaragua. The score is two notches higher than the ratings given by Moody's, which has the $17bn Central Asian economy at 'B3' – that’s the equivalent to a 'B-' S&P or Fitch Ratings rating.

The rating agency’s March 28 announcement comes as Kyrgyzstan moves towards issuing its debut bond on the international capital markets. The eurobond issuance should occur in the coming weeks, a top government official was on March 31 reported by Reuters as saying. A roadshow in London for would-be investors is expected to take place in a couple of weeks’ time.

S&P noted the rapid economic growth registered by Kyrgyzstan over 2022-2024, averaging 9% annually in real terms. Domestic demand, boosted by favourable external factors, has underpinned this expansion, it said, projecting that growth would moderate by 2026 but remain strong.

“Following sanctions on Russia in 2022, some regional supply corridors have been rerouted through Kyrgyzstan, benefiting the local economy,” said S&P.

The rating firm cautioned: “We view the country's balance of payments position as vulnerable, with recurrent current account deficits, a prevalence of lower-value added goods in the export structure, dependence on remittances, and regional trade conditions that have been unusually accommodative.

“In contrast, Kyrgyzstan's fiscal position is comparatively strong: We forecast net general government debt will rise only marginally to 32% of GDP by 2028, compared with 45% of GDP at end-2019. Most public debt is contracted abroad from official sources at long maturities and favorable interest rates.”

Looking ahead according to a “downside scenario”, S&P said: “We could lower our ratings on Kyrgyzstan if external trade conditions proved significantly less accommodative, with adverse implications for the country's growth, balance of payments, and fiscal position. This could be the case, for example, under a scenario where regional trade is rerouted away from Kyrgyzstan or if terms of trade deteriorate.

“Given that the country has experienced three revolutions over the past 20 years, possible domestic political instability also represents a risk to the ratings, especially if there were adverse implications for fiscal and debt management. This is not our baseline scenario, however.”

Presenting an “upside scenario”, S&P said: “We could raise the ratings if Kyrgyzstan's balance of payments vulnerabilities diminished, while per capita income and economic diversification improved without a material weakening of the country's fiscal position.

“We could also raise the ratings if Kyrgyzstan's institutional arrangements strengthened, as seen with more resilient checks and balances between governing bodies, established precedents of orderly electoral power transfers, and a track record of prudent approach to contracting and managing commercial debt.”