Costa Rica: one step away from investment grade
Moody's kept the ratings for Government bonds at Ba1, one level below the rating for investment; nonetheless, the outlook was raised from stable to positive.
Wednesday, August 13, 2008
If the rating is raised, Costa Rica will join Brazil and Peru as countries from Latin America who have reached the investment grade during the last few months.
Moody's downgraded the rating to "Ba2" from "Ba1", citing a continued deterioration of the country's financial condition.
The rating agency's reason for the change from stable to negative is the increasing public debt and lack of fiscal reform.
Better ability to handle fiscal accounts and an upward trend in foreign investment are the factors that the rating based its upgrade on, changing the debt rating from B3 to B2.
In all three countries, public finances have deteriorated due to higher fiscal deficits generated by increased government spending.
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