New Warning to Costa Rica

Fitch Ratings reported that the country is under observation and for now maintains the rating at BB, awaiting what happens with the fiscal reform and the payment of government debt at the end of the year.

Friday, November 16, 2018

Fitch Ratings, a U.S. risk rating agency, reported on November 15th that Costa Rica would be close to a sovereign rating downgrade because of the country's public finances situation.

Carlos Morales, director of Fitch's Latin American Sovereigns group, said to Nacion.com that "... The rating remains at BB because we will wait for the outcome of the tax reform and the debt payment at the end of the year. But (the statement) is to indicate that there is a higher probability of degradation."

See "Risk Rating Downgrade Approaching"

Morales added that "... this revision is very short term and has a special emphasis on the debt payment and the loan of almost ¢500.000 million granted by the Central Bank to the Government. We will be checking those events and based on the result we will decide if this can be lowered one (step) or if the deterioration is that way, the possibility of further degradation will be discussed."

Fitch Ratings' review adds to the one announced by Moody's in October, when the rating agency reported that expectations of a continued decline in fiscal indicators and evidence of an increase in financing needs are some of the reasons behind the decision to re-rating the country's debt.

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More on this topic

Costa Rica: Political and Fiscal Uncertainty Take Its Toll

June 2020

Standard & Poor's downgraded the foreign debt rating from B+ to B with a negative outlook, arguing that there is uncertainty due to the lack of flexibility of the Alvarado administration in implementing fiscal policy in the country.

The negative perspective in the new risk note, anticipates that there is a possibility that in the next 12 months the rating will be degraded again, if the authorities adopt policies that damage the country's financial profile.

Threats to Risk Rating

July 2019

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.

Risk Rating Downgrade Approaching

October 2018

Moody's downgraded the long-term issuer ratings and the Costa Rican government's unsecured bonds.

Yesterday the risk rating agency reported that expectations of a continued decline in fiscal indicators and evidence of increased financing needs are some of the reasons behind the decision to revise the country's debt rating.

Fitch Downgrades Mexico to 'BBB'

November 2009

Fitch downgraded Mexico's Issuer Default Rating (IDR) from 'BBB+' to 'BBB' in foreign currency and from 'A-' to 'BBB+' in domestic currency.

Both ratings have a 'Stable' outlook. Additionally, the country's ceiling was reduced to 'A-' from 'A'.

Fitch downgraded Mexico's ratings because the country's fiscal situation has gotten worse with the financial crisis and a reduction in Mexican oil production.

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