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.
The governments of Costa Rica and Nicaragua will face greater challenges in obtaining financing in external markets, because of the lowering of their risk ratings by international agencies.
Arguing that Costa Rica reflects consistently large fiscal deficits, short-term financing needs because of a strong repayment schedule and budget financing constraints, Fitch Ratings reported on January 15 that the country's long-term foreign currency issuer default rating was downgraded from BB to B+.
Standard and Poor's announced that it downgraded Costa Rican bonds from BB- to B+, adding to Moody's downgrade in early December.
Standard and Poor's (S&P) reported that the decision was made because the country's fiscal situation could generate a continuous increase in the general government's net debt burden.
“If the recent tax reform is not effectively implemented, and if additional fiscal measures are implemented if necessary, a continuous increase in the net debt burden of the general government could be generated, which will contribute to higher interest expenditures," explains the S&P report."
Arguing a moderate fiscal deficit, low level of public debt and an improvement in the country's external position, Standard & Poor´s kept the country's credit risk rating at BB-.
From the press release of the Banco de Guatemala:
October 31, 2018. The risk rating agency Standard & Poor’s (S&P) confirmed the rating of credit risk for Guatemala in BB- and maintained the stable outlook on Monday, October 29th.
In the view of Moody's, Fitch and S & P, the latest projections of public debt and fiscal deficit by the Central Bank of Costa Rica, further worsen the outlook for the debt rating.
Last week the Central Bank of Costa Rica (BCCR) released a report in which it explained that for this year it is expected that the public debt with respect to the Gross Domestic Product (GDP) will reach 53.8%, and by 2019 this indicator will reach 58.4%.
S & P has improved Panama's outlook from stable to positive, re-affirming its BBB risk rating based on factors such as "high and consistent economic growth and a stable fiscal policy".
The rating granted by Standard & Poor's recognized "... the progress made by Panama in recent years for the automatic exchange of tax information with 33 countries and changes in legal regulations to improve transparency in the financial system."
Confirmation of the decline in the financial capacity of the construction company has strengthened arguments by those calling for the revision of their contracts and that the firm not be awarded others.
From a statement issued by Standard & Poor's:
SAO PAULO (Standard & Poor's) March 29, 2016--Standard & Poor's Ratings Services lowered its global scale corporate credit rating on Odebrecht Engenharia e Construção S.A.
The sovereign rating B + with stable outlook is based on the "economic performance, low debt burden of the government, political stability and partnership between government and the private sector through dialogue".
From a statement issued by the Central Bank of Nicaragua:
The Republic of Nicaragua has low per capita income, monetary policy rigidities, and vulnerability to external shocks.
"... The political scene continues to block structural reforms that would create a platform for more private investment and higher economic growth."
From a statement issued by the Presidency of El Salvador:
The rating agency Standard & Poor's has raised its growth forecasts for El Salvador to 2.6% for the period 2016-2018 in its latest analysis of the Salvadoran economy, in which it also reaffirmed the strength in the country's debt payment allowing it to maintain a stable rating of B + B.
The ratings agencies Standard & Poor's and Moody's have left the sovereign debt rating of Honduras unchanged.
The rating agencies Standard & Poor's and Moody's have not changed the ratings of the sovereign debt of Honduras leaving it at Stable Negative B and B2 respectively, as reported for December 2013 by both agencies and published by the Central American Monetary Council (CMC).
Standard & Poor's has downgraded the sovereign rating of Honduras to "B" from "B +" with a stable outlook because of its diminished fiscal flexibility and increased debt burden.
A statement from S & P:
Summary
Honduras' reduced fiscal flexibility and growing debt burden have made it vulnerable to external shocks or political problems.
We believe it is likely that the high level of central government deficit, of 6% of GDP in 2012 and this year, will increase the net government debt to 27% of GDP by the end of 2013 compared with 21% in 2012.
The risk rating agency has reaffirmed the country's long term rating, keeping it at BBB with a stable outlook.
From a statement by S & P:
Summary
The expectations of strong growth in Panama, its increasing diversification and stable macroeconomic environment counteract its small open economy which is vulnerable to fluctuations in global economic conditions; other positive factors are their growing local capitals market and its improving political institutions.
"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."
Standard & Poor's placed has set El Salvador’s risk rating as ‘negative outlook’, indicating deterioration in the investment climate and growth of the fiscal deficit.
Last Friday Standard & Poor's Ratings (S & P) cut its forecast for El Salvador, arguing that the climate of increasing political polarization is weighing on investment and economic growth.
The promotion to "BB" rating with a stable outlook is based on better GDP growth and tax revenues.
From the press release:
Summary
We expect that the government of Guatemala will reduce fiscal deficits averaging 2.5% of GDP over the next three years, compared with previous estimates of over 3% of GDP.
The new tax legislation in Guatemala will provide an opportunity to increase gradually its still low tax revenues through better tax administration.