El Salvador: Negative Outlook Rating Kept

Fitch Ratings has maintained its BB-rating but noted prevailing structural weaknesses such as low competitiveness, crime, weak human capital and the high cost of energy.

Friday, July 11, 2014

From a press release issued by Fitch Ratings:

Fitch Ratings has affirmed the long-term long-term debt rating in both dollars and local currency at 'BB-'. Fitch also affirmed the ratings of bonds in foreign and local currency without gurantee from El Salvador at 'BB-', maintaining the negative outlook.

The reaffirmation of the ratings of El Salvador is reflected in the following factors:

El Salvador's ratings are supported by its sustained macroeconomic stability due to dollarization, an adequately capitalized financial system, and solid payment history. The government has a strong track record in implementing fiscal reforms despite a low economic growth environment.

A dialogue between the new FMLN government and major private sector organizations has the potential to define a national strategy for sustainable development and social inclusion. This comes after five years of confrontation during the previous administration. However, it is too early to predict whether this dialogue will lead to better investment and growth prospects in the forecast period. The risks of a breakdown in the process of discussion are still prevalent due to high levels of mutual distrust and alternative views on key issues, including public sector involvement in the economy and public finances.



More on this topic

S&P Confirms Nicaragua's Debt Rating

February 2018

Standard & Poor's has maintained the rating of B+ for long-term sovereign debt, arguing that economic growth is stable and the burden of public debt remains moderate.

From a statement issued by Standard & Poor's:

On Feb. 16, 2018, S&P Global Ratings affirmed its 'B+' long-term local and foreign currency sovereign credit ratings on the Republic of Nicaragua.

Fitch Lowers Rating Outlook for El Salvador

July 2012

Fitch Ratings has downgraded the economic perspective of the rating, making it negative outlook BB.

From the press release by Fitch Ratings:

Fitch Ratings - New York - July 24, 2012: Fitch Ratings affirms its ratings for El Salvador as follows:
- Long-Term Ratings (IDR) in foreign currency and local currency 'BB';

Fitch Publishes El Salvador's Sovereign Rating

September 2010

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 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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