Fitch Lowers Rating Outlook for El Salvador

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

Wednesday, July 25, 2012

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';
- Short-term rating 'B';
- Country Ceiling: 'BBB-'.

The Rating Outlook has been revised to Negative from Stable.
The revision of the outlook reflects the continued low economic growth performance of El Salvador in relation to its peers, which is expected to continue over the forecast period due to structural impediments faced by the economy. Large fiscal deficits and the difficulty in consolidating fiscal accounts have quickly produced a burden of debt persistently above 50% of GDP, well above the average for 'BB'. This restricts the ability of government policy to respond to external and domestic shocks. In Fitch's view, global economic uncertainty poses risks for additional unfavourable economic and fiscal projections for El Salvador.

The prospects for economic growth in El Salvador are weaker than those of most of its peers in the light of the country’s low level of competitiveness and low investment and high crime rates. Government initiatives to accelerate growth and improve the business climate have been slow to materialize.



More on this topic

El Salvador: Negative Outlook Rating Kept

July 2014

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.

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 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 Publishes Panama Sovereign Report

May 2010

On March 2010, Fitch Ratings raised Panama’s long-term foreign currency and local currency Issuer Default Ratings (IDRs) to 'BBB-' from 'BB+'.

The upgrades reflect a sustained improvement in public finances, underpinned by recent tax reforms, and the economy's resilience to the global financial crisis and associated recession.

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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