TEXT-Moody's cuts Latvia's Latvenergo's rating to A3

(The following statement was released by the rating agency)

Nov 10 - Moody's Investors Service has today downgraded Latvenergo's
("Latvenergo") issuer rating to A3 from A2, following an earlier decision by
Moody's to downgrade Latvia's local currency rating to A3 from A2. The outlook
on Latvenergo's A3 issuer rating remains negative reflecting the negative
outlook assigned to Latvia's A3 local currency bond rating.
In accordance with Moody's Government Related Issuer ("GRI") rating
methodology, the rating of Latvenergo reflects the combination of the following
inputs:
- Baseline credit assessment of 10 (on a scale of 1 to 21, where 1 represents
the lowest risk and 10 is equivalent to Baa3)
- A3 local currency rating of the Latvian government
- High dependence
- High support
Moody's assessments of Latvenergo's baseline credit risk and government support
remain unchanged at this stage. The rating action therefore solely reflects the
impact of the sovereign rating action, as applied through Moody's GRI rating
methodology. In light of the ongoing global financial crisis, Moody's has
reassessed the level of default dependence for Latvenergo from medium to high,
reflecting Latvenergo's significant exposure to the Latvian economy and high
level of external debt.
Moody's last rating action from 26 September 2008 changed the outlook on
Latvenergo's issuer rating to negative from stable following Moody's decision
to change the outlook on Latvia's A2 local currency rating to negative.
Latvenergo is a dominant, vertically integrated 100% state-owned utility in
Latvia with a total electricity generation capacity of 2,067 MW and 2007 sales
of EUR516 million.
(New York Ratings Team)