The rating agency decided to maintain at "B" the long-term and short-term local and foreign currency sovereign credit rating, with a negative outlook indicating the risk of a downgrade in case the Assembly does not approve an Extended Fund Facility or other policy measures.
In the current scenario, covering the government's large financing needs may require resorting to the central bank or other non-conventional financing, highlights the rating agency's analysis.
Due to the deterioration of fiscal indicators resulting from the severe economic impact of the pandemic, Moody's downgraded the Panama Canal Authority's senior unsecured debt rating from A1 to A2.
Given that the A2 rating is three notches above Panama's Baa2 sovereign rating, a rating upgrade is unlikely in the near term. An upgrade would require the ACP to continue to strengthen independently and Panama's sovereign rating to be upgraded, the rating agency said.
The rating agency kept the country's debt rating at B3, but decided to change the outlook from stable to positive, arguing that the government's liquidity risks have been substantially reduced.
The affirmation of El Salvador's B3 sovereign ratings reflects high public debt ratios and a growing interest burden, the rating agency said.
Arguing that economic strength has weakened as a result of social tensions and is likely to leave a lasting negative impact, the rating agency reduced the country's credit risk rating from B2 to B3.
"The risk of reduced access to official external credit is creating financing challenges and restricting the authorities' ability to support economic activity," the agency's report explains.
Arguing that the high fiscal deficit is still on an upward trend, the rating agency downgraded the long-term and senior unsecured government bond issuer's note from B1 to B2.
Fiscal deficits averaging more than 6% of GDP since 2015 have led to higher public debt/GDP than its 'B'-rated peers, the rating agency said.
From Moody's statement:
New York, February 10, 2020. Moody's Investors Service, ("Moody's") has today downgraded the Government of Costa Rica's long-term issuer and senior unsecured bond ratings to B2 from B1 and changed its rating outlook to stable from negative.
The rating agency maintained BBB's long-term issuer default rating, but decided to change the risk outlook from stable to negative, arguing that the debt burden will continue to increase in 2020.
KEY RATING DRIVERS
The revision of Panama's Outlook to Negative reflects a marked deterioration in fiscal deficits and a significant increase of the government's debt burden, related to accumulation of arrears by previous administration and higher fiscal deficit targets under the modified Fiscal Responsibility Law. In addition, the recent greater-than-anticipated growth deceleration creates additional challenges for fiscal consolidation.
Because of its financial and competitive strength, the rating agency Fitch Ratings confirmed that the risk rating as an issuer of long-term debt is "A", with a stable outlook.
The ratings reflect an underlying asset that is critical not only for Panama, but also for international trade, as evidenced by its stable volume performance, solid competitive position and well-diversified cargo mix, the ratings company explained.
After the country issued $1.097 million in Eurobonds for a 30-year term, Moody's gave them a "B3" rating, while Fitch Ratings assigned them a "B".
Fitch Ratings has assigned a 'B-' rating to El Salvador's $1.097 million notes due January 2050. The notes have a coupon of 7.1246%, the agency said.
The Fitch statement dated July 31 adds that "... The proceeds from the issue will be used in accordance with local laws for general budgetary purposes, including the redemption of bonds maturing this year. The rating of the bonds is aligned with El Salvador's long-term foreign currency issuer default rating (IDR) of 'B-' with a stable outlook."
Standard & Poor's explained that continuity in economic and investment policy next year, and overall political stability, support the decision to keep the rating at BB- with a stable outlook.
We could raise the ratings next year if a faster and more effective implementation of the expected energy reform strengthens Honduras' economic growth and fiscal flexibility above our expectations, the risk qualifier explained.
Moody's assigned to Empresa de Transmisión Eléctrica de Panamá a Baa1 issuer rating, arguing that it reflects key credit strengths and is the only electricity transmission company in the country.
Gilberto Ferrari, general manager of Empresa de Transmisión Eléctrica (Etesa) explained to Panamaamerica.com.pa that "... This qualification is one of the most important milestones in the history of the company and the energy sector of our country.
The governments of Costa Rica and Nicaragua will face greater challenges in obtaining financing in external markets, because of the lowering of their risk ratings by international agencies.
Arguing that Costa Rica reflects consistently large fiscal deficits, short-term financing needs because of a strong repayment schedule and budget financing constraints, Fitch Ratings reported on January 15 that the country's long-term foreign currency issuer default rating was downgraded from BB to B+.
Standard and Poor's announced that it downgraded Costa Rican bonds from BB- to B+, adding to Moody's downgrade in early December.
Standard and Poor's (S&P) reported that the decision was made because the country's fiscal situation could generate a continuous increase in the general government's net debt burden.
“If the recent tax reform is not effectively implemented, and if additional fiscal measures are implemented if necessary, a continuous increase in the net debt burden of the general government could be generated, which will contribute to higher interest expenditures," explains the S&P report."
The rating agency reduced the long-term and senior unsecured bond issuer ratings of the Costa Rican government from Ba2 to Ba1 and changed the outlook to negative.
According to Moody's, among the main factors behind the decline is the continued and projected worsening of debt metrics in the back of large deficits despite fiscal consolidation efforts.
Fitch Ratings reported that the country is under observation and for now maintains the rating at BB, awaiting what happens with the fiscal reform and the payment of government debt at the end of the year.
Fitch Ratings, a U.S. risk rating agency, reported on November 15th that Costa Rica would be close to a sovereign rating downgrade because of the country's public finances situation.
Moody's downgraded the long-term issuer ratings and the Costa Rican government's unsecured bonds.
Yesterday the risk rating agency reported that expectations of a continued decline in fiscal indicators and evidence of increased financing needs are some of the reasons behind the decision to revise the country's debt rating.
Rocio Aguilar, Finance Minister, explained to Crhoy.com that Moody's warning is "...