Poland’s court crisis to negatively impact its credit rating, says Moody’s

Moody’s issued a warning of a possible negative impact of constitutional court crisis on Poland’s credit rating. Although the Polish sovereign rating from Moody’s will not be revised until May 13, the comments suggested that the downgrade is likely (rather than just outlook downgrade to ‘negative’).

On the other hand, since a similar step had already been taken by the S&P agency, this should be no major surprise and such a move has probably already been priced in.

"We, therefore do not expect a significant market reaction (such as that we saw after the S&P downgrade in January) unless Moody’s surprises markets by cutting the Polish rating (A2) by more than one notch," KBC Central European Daily commented in one of its research note.

In addition, the National Bank of Poland (NBP) is expected to remain on hold at the monetary policy meeting scheduled today, nevertheless on the back of interest rate cut seen in Hungary and PLN strengthening more dovish comments are likely to come in order to prepare the market for a possible rate cut in the upcoming months.

Meanwhile, the Polish banking sector posted PLN 812 million net profit in total in February (-35.3 percent y/y and – 22.9 percent m/m) according to NBP.