Arguing that a lower economic growth and a higher fiscal deficit are expected due to the effects of the covid-19, the agency decided to modify from BB to BB- the country risk rating.
The situation of the tax burden in the country is another factor affecting Fitch's decision, which was communicated to the Banco de Guatemala through the preliminary bulletin that the agency sent to the authorities.
The ratings agency Fitch Rating puts El Salvador along with Argentina, Jamaica and Venezuela, in the group of countries in the region which will grow the least in 2013.
Elmundo.com.sv reports that "El Salvador, along with Venezuela and Argentina, is the country with the worst credit rating in Latin America, according to a report by the risk measurement agency Fitch, which categorizes the prospects of credit rating of these countries as 'negative'.
The rating agency Fitch Ratings has raised its grade to BBB and the perspective changed from positive to stable.
The way the government has structured its debt and the economic boom the country is experiencing are some of the elements that justify the improvement in the rating given by Fitch Ratings.
In addition, banking stability and political consensus among political parties on the economic direction that the country should take have also influenced the revision of the grade.
Fitch Ratings has recently confirmed that the country's local and foreign currency risk classification as 'BB', with Outlook Negative.
El Salvador's main credit weaknesses include its comparatively slow GDP growth, a narrow income base and rigid fiscal policy, particularly apparent in the light of the country's vulnerability to the US economic slowdown and corresponding drop in capital movement.
Fitch Ratings has announced that the country’s long term foreign and local currency rating remains “BB” with a negative outlook.
Fitch has also announced El Salvador’s short term rating as “B” and the country’s rating as “BBB-”.
El Salvador’s risk profile is a function of its monetary stability (helped by its official dollarization), a good history of structural reform, a stable financial system and the continuing support of multinational institutions. In addition, the country has coped well with the global financial crisis and unprecedented domestic political transition, in which the left-wing FMLN government took power after approximately 20 years of rule by the right-leaning ARENA party.
Fitch Ratings Central America commented on the state of the Honduran banking system, in the light of recent political developments.
Risks faced by Honduran banks due to the adverse economic environment have increased as a result of recent political events in the country. A Fitch report on April 2009 reported that Honduran banks were sensibly affected by the adverse local and regional economic environment.
Guatemala´s BB+ sovereign risk rating and stable perspective, which is so close to the desired “Investment Grade,” is facing four threats.
According to an article by C.Véliz and J. Gramajo in Sigloxxi.com, Mauricio Choussy, the director of Fitch Central America, notes that four weaknesses persist in the country: “Low tax revenue, weak social indicators, social instability, and high levels of delinquency.”
Fitch upgraded long term and short term ratings for FICOHSA bank to A-(hnd) and F1(hnd), up from BBB+(hnd) and F2(hnd), respectively.
At the same time it also upgraded the ratings for FICOHSA Corporate Bonds from BBB+(hnd) to A-(hnd). The outlook assigned is stable.
The new ratings reflex the strengthening of FICOHSA bank's networth, improvements in financial performance, and the strengthening of its participation in the commercial banking system market in Honduras.
Fitch Ratings has lowered the investment rating of the electical distribution company AES El Salvador from BBB- to BB+.
The ratings company said it downgraded the company because changes in the regulatory system have negatively affected its EBITDA and its profitability.
EBITDA refers to the relationship between debt and cash flow of a company.
El Salvador's four other energy distributors will be similarly affected.
The International Bank of Costa Rica (Banco Internacional de Costa Rica) has launched a debt issue in Panama with a maturity of three to five years.
With capital payments on maturity and quarterly interest payments the issue will be for 50 million dollars in series.
The issue, whose interest rate will be previously agreed to upon placement, is currently being subscribed.
Fitch Ratings has dropped El Salvador electricity distributor DelSur from an AAA rating – the highest available – to A+, still high but slightly more vulnerable.
Fitch said it revised DelSur's rating because the company had guaranteed a US$100 million loan and new electricity tariffs would mean a 5 percent loss of income.