Moody's Downgrades Nicaragua

Arguing that economic strength has weakened as a result of social tensions and is likely to leave a lasting negative impact, the rating agency reduced the country's credit risk rating from B2 to B3.

Wednesday, February 19, 2020

"The risk of reduced access to official external credit is creating financing challenges and restricting the authorities' ability to support economic activity," the agency's report explains.

Regarding the downgrading of the rating, economist Nestor Avendaño told Laprensa.com.ni that "... Nicaragua would be on the verge of falling into junk bonds, what does this mean, that if the rating is degraded further, nobody will want to lend to the country and whoever does it will be with a high interest rate, because there will be a high risk of falling into default, as is the case with Venezuela."

Although the negative effect of the social unrest the country has experienced has caused severe damage to the economy, Moody's decided that the rating outlook is stable.

The adjustment in the country's external accounts has helped to contain liquidity stemming from lower inflows of foreign direct investment (FDI), is the agency's argument for setting the B3 rating at stable.

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Institutional problems and lower levels of economic growth compared to other countries with the same risk rating, could cause in the future a degradation of Guatemala's debt rating.

Although in its last evaluation Moody's decided to keep Guatemala's credit rating at Ba1 with a stable outlook, arguing that the economy reports stable growth, and that a prudent management of monetary and fiscal policy has been made, there are some threats for the rating to degrade.

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Standard and Poor's announced that it downgraded Costa Rican bonds from BB- to B+, adding to Moody's downgrade in early December.

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Guatemalan Debt Rating Confirmed

June 2018

Citing a long history of fiscal and monetary policy characterized by prudent management, the rating agency Moody's maintained the country's credit risk rating in Ba1.

From a statement issued by the Bank of Guatemala:

June 2018. Moody's Investors Service maintains the credit risk rating for Guatemala at Ba1 with a stable outlook.  

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."

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