Moody's Investors Service - one of the largest rating firms internationally - has changed its outlook on Maldives' issuer ratings from stable to negative on Wednesday.
The ratings firm affirmed a B2 rating to the Indian Ocean archipelago over mounting external debt piling due to heavy infrastructural development projects.
According to the review from Moody's it took decision to change "outlook to negative reflects liquidity and external vulnerability risks stemming from a sharp rise in the government's debt burden that is expected to extend at least until the beginning of the next decade when a large scale infrastructure program is scheduled to complete."
Moody's also noted that Maldives state suffered from limited financing sources which includes domestic banking services and external investors which in turn does not match up with the gross financing needs required by the massive scale infrastructural development projects carried across the country.
"The decision to affirm the B2 rating is supported by the improvement in growth potential that infrastructure development is likely to bring, balanced by a rising debt burden and declining debt affordability as the Maldives reduces the proportion of concessional funding in its funding mix," Moody's wrote.
Furthermore the ratings agency expects Maldives government's borrowing needs will increase to 8.3% of GDP (Gross Domestic Product) by 2019 from 7.1% of GDP in 2017, adding "although needs should remain contained around these levels until 2022, Moody's estimates that they will rise to 9.1% in that year, when the repayment on the sovereign bond comes due."