Costa Rica: Cascade Effect on Bank Risk Ratings

After last weeks downgrading of the country 's sovereign rating to BB, Fitch Ratings has downgraded the risk rating of six Costa Rican banks.

Monday, January 30, 2017

The agency downgraded the banks Banco Nacional, BCR, Bicsa and Banco Popular, all owned by the Costa Rican government, from BB + with a negative outlook to BB with a stable outlook.

The rating for the Colombian capital banks Davivienda and BAC was lowered from BBB to BBB-.

From a report by Fitch Ratings:

".. Fitch has downgraded the viability rating (VR) for BAC San José, BCR, BNCR and BPCD to keep VR scores on the same level as the sovereign rating, reflecting the high influence of the sovereign and the local operating environment on the financial sector and the credit profiles of these banks. As indicated in Fitch's rating criteria, banks are rarely rated above the sovereign rating. The agency also downgraded the Support Ratings or SRs, Support Rating Floor or SRF and the national ratings of some of these institutions in Panama. Details are in the section on key factors of ratings.

See full report (In Spanish)

More on this topic

Costa Rica: Fitch Maintains Sovereign Rating

January 2016

The agency has maintained its BB + rating with a negative outlook but again warned about the high fiscal deficit and the difficulties the country faces in passing a tax reform bill.

From a statement issued by Fitch Ratings:

Fitch Ratings-New York-20 January 2016: Fitch Ratings has affirmed Costa Rica's Long-term foreign- and local-currency IDRs at 'BB+'.

Fitch Upgrades Ccsta Rica to 'BB+'

March 2011

Fitch upgraded Foreign currency IDR to 'BB+' from 'BB'; Country ceiling to 'BBB-' from 'BB+'; Local currency IDR affirmed at 'BB+'; and Short-term IDR affirmed at 'B'. The Rating Outlook is Stable.

From the Fitch Report:

"The upgrade reflects Costa Rica's better than expected economic resilience during the global credit crisis, steadily improving macroeconomic stability underpinned by lower inflation and higher international liquidity as well as the country's relatively modest external indebtedness.

Fitch Downgrades Mexico to 'BBB'

November 2009

Fitch downgraded Mexico's Issuer Default Rating (IDR) from 'BBB+' to 'BBB' in foreign currency and from 'A-' to 'BBB+' in domestic currency.

Both ratings have a 'Stable' outlook. Additionally, the country's ceiling was reduced to 'A-' from 'A'.

Fitch downgraded Mexico's ratings because the country's fiscal situation has gotten worse with the financial crisis and a reduction in Mexican oil production.

Fitch changes outlook for El Salvador to negative

October 2008

Fitch Ratings has revised the Rating Outlook on El Salvador's long-term foreign and local currency Issuer Default Ratings (IDRs) to Negative from Stable.

The ratings are as follows:
Long-term foreign currency IDR at 'BB+'; Long-term local currency IDR at 'BB+'; Short-term foreign currency at 'B'; Country ceiling at 'BBB-'.

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