The credit rating agency, DBRS Morningstar, confirmed the “AAA” rating of the Grand Duchy of Luxembourg, with a stable perspective.
DBRS Morningstar and its rating for Luxembourg
DBRS Morningstar is a full-service international credit rating business that provides independent credit ratings for financial institutions, corporate and independent entities, and structured finance products and instruments.
DBRS Morningstar has recently confirmed that the credit fundamentals of the Grand Duchy of Luxembourg remain strong, despite the shock caused by the war in Ukraine.
After growing strong in Q1 of 2022, real GDP contracted by 0.5% in Q2 of 2022. But DBRS Morningstar expects economic growth to remain sluggish during the remainder of this year.
DBRS Morningstar also expects the negative impact of inflation on consumer and business morale to deteriorate moderately this year and next, through the enactment of the support measures decided within the framework of the Tripartite.
At the budget level, DBRS Morningstar notes that the country has the essential leeway while pointing out that support measures for households and businesses should weigh on public finances in 2022 and 2023.
What contributes to the rating
These ratings are supported by Luxembourg‘s stable political environment, its advanced and wealthy economy, its solid external position, and its position as a global financial center.
In the same way, DBRS Morningstar stated that Luxembourg‘s low level of public debt is another key element of its appreciation for credit rating. According to the agency, Luxembourg‘s credit rating is similarly supported by the high quality of public institutions and the political stability of the country.
DBRS Morningstar believes that the all-around situation of the banking sector remains solid and that a lowering of the credit rating is uncertain, given that the attractiveness of the Financial Center is maintained and as long as the volatility of the financial markets does not cause a major shock.
Even if Luxembourg’s level of public debt was to increase slightly in 2022 and 2023, the debt ratio of the Grand Duchy will remain among the lowest in Europe. So given Luxembourg’s strong fundamentals, DBRS Morningstar sees a downgrade of the ratings as unlikely.
Being globally renowned for its strong financial and economic performance, its sustained job creation, and its social and political stability, Luxembourg is an excellent investment center. To get started with your company, your startup, your investment fund in Luxembourg, let’s go ahead and contact your Damalion expert now. If you want to relocate to Luxembourg, Damalion relocation services will be glad to assist you and your family.
