Guatemala: Glass Half Full or Half Empty?

The country's macroeconomic strength contrasts with its credit weakness and low tax base, which Fitch Ratings believe keep its ratings below investment grade.

Monday, August 16, 2010

Fitch Ratings recently affirmed Guatemala's local and foreign currency Issuer Default Ratings as BB+. The main positive factors contributing to this risk evaluation are its history of macroeconomic stability and debt repayment combined with low debt burden.

However, balanced against these factors, Fitch highlights weaknesses, "including its low tax base, high level of poverty and income inequality, as well as its weak social and governance indicators, continue to weigh on Guatemala's ratings. 'These factors will take time to address and are likely to constrain Guatemala's ratings to sub-investment grade over Fitch's rating horizon,' the ratings agency said, according to centralamericanpolitics.blogspot.com.

The ratings agency states that social and economic reforms could make Guatemala a more encouraging investment proposition.

More on this topic

Fitch Rates Guatemala at BB Stable

May 2016

Highlights include a long history of macroeconomic stability even during political crises, and authorities' commitment to fulfilling public debt obligations.

From a statement issued by the Bank of Guatemala:

After its recent visit to the country, the rating agency Fitch Ratings confirmed on Friday April 29, 2016, the credit rating of Guatemala at BB with a stable outlook.

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-'.

Guatemala's Sovereign Risk Rating Revised

July 2013

"Weak public institutions in Guatemala and a polarized political environment continue to limit its credit quality" - Standard & Poor's

An article in elperiodico.com.gt reports that "The three most important credit rating agencies internationally: Moody's, Standard & Poors and Fitch Ratings, have pointed to deficient management in Guatemala's social indicators."

Fitch has affirmed Guatemala's IDRs at BB+

July 2009

Fitch Ratings has affirmed Guatemala's local and foreign currency Issuer Default Ratings (IDRs) at 'BB+'. The Rating Outlooks on both ratings are Stable.

Guatemala's track record of macroeconomic stability, low public and external debt burdens, as well as the government's solid commercial debt repayment history continue to support the sovereign's ratings.

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