Fitch Downgrades Guatemala's Risk Note

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.

Friday, April 3, 2020

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.

See "Post-Quarantine Consumption Patterns"

Sergio Recinos, president of the Bank of Guatemala, told Prensalibre.com that "... The rating we had with Fitch was BB positive and now it is down to BB negative; before we had a negative perspective and now a stable perspective. We are down a step and the two main arguments are the little fiscal flexibility and a low tax burden and on the other hand, derived from the effects of covid-19, they estimate a drop in economic growth."

Recinos added that Fitch "... is still not considering that this crisis is global and will impact everyone; but at this moment it is a preliminary statement, but further confirmation is awaited."

This deterioration in the note may affect future issues of Eurobonds or the acquisition of credit lines from abroad.

Covid-19: How do the outlook for businesses in Guatemala change?

We prepared for our clients the report "Information system: Covid-19 and business forecasts" which helps companies to measure the impact that the crisis will have on their activity in the coming months.

Click here to request access to this report.



More on this topic

Costa Rica: S&P Confirms Risk Rating

March 2021

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.

Costa Rica: Moody's Downgrades Debt Outlook

June 2020

The rating agency decided to keep the long-term issuer's note at B2, but changed the risk outlook from stable to negative, arguing that there are greater risks to the country's financing due to increased borrowing requirements.

The affirmation of Costa Rica's B2 rating takes into account the sovereign's levels of wealth above its peers and its dynamic economy.

Panama Issues $2.5 Billion in Bonds

March 2020

The government issued $2.5 billion in sovereign bonds in the international market, maturing in 2056 and with an interest rate of 4.5%.

It is worth noting that this is the first sovereign bond issue since the beginning of the Covid-19 crisis in all of Latin America and that this transaction was executed with great success, exceeding more than 3 times the amount issued, reported the Ministry of Economy and Finance.

Standard & Poor's Affirms Costa Rica's Ratings

February 2015

The agency has maintained the rating for sovereign bonds at "BB" but warned of the risks to which the economy is exposed if not a tax reform does not take shape.

From a statement issued by Standard & Poor's:

Standard & Poor 's Ratings Services has affirmed its' BB / B' rating on long- and short-term foreign and local currency sovereign bonds of the Republic of Costa Rica.

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