ISLAMABAD: Moody's Investors Service (Moody's) has downgraded the government of Pakistan's local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1. Moody's has also downgraded the rating for the senior unsecured MTN programme to (P) Caa3 from (P) Caa1. Concurrently, Moody's has also changed the outlook to stable from negative. The rating agency stated that the decision to downgrade the ratings is driven by its assessment that Pakistan's increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating.