As a result of the corruption case in Costa Rica involving a shareholder of Constructora MECO, Fitch Ratings downgraded the company's long-term national rating to "A-(pan)" from "AA-(pan)", and at the same time placed it on Negative Watch.
On the morning of June 14, 2021, some 700 agents of the Judicial Investigation Agency (OIJ) and the Public Prosecutor's Office (prosecutors) raided 21 homes, Casa Presidencial, Ministry of Public Works and Transportation (MOPT), National Viability Council (Conavi) and Public Transportation Council (CTP).
The rating agency affirmed the Central American Country’s Long-Term Foreign Currency Issuer Default rating at "B-" and reviewed the rating outlook to stable from negative.
Nicaragua's ratings are constrained by the lowest average World Bank Governance Indicators score in the Americas rated by Fitch, low per capita income, political stability risks, and international sanctions that limit future external financing, the rating agency's analysis highlights.
The rating agency decided to maintain at "B" the long-term and short-term local and foreign currency sovereign credit rating, with a negative outlook indicating the risk of a downgrade in case the Assembly does not approve an Extended Fund Facility or other policy measures.
In the current scenario, covering the government's large financing needs may require resorting to the central bank or other non-conventional financing, highlights the rating agency's analysis.
Due to the deterioration of fiscal indicators resulting from the severe economic impact of the pandemic, Moody's downgraded the Panama Canal Authority's senior unsecured debt rating from A1 to A2.
Given that the A2 rating is three notches above Panama's Baa2 sovereign rating, a rating upgrade is unlikely in the near term. An upgrade would require the ACP to continue to strengthen independently and Panama's sovereign rating to be upgraded, the rating agency said.
Moody's maintained the Salvadoran government's long-term and senior unsecured issuer rating at B3, but decided to change the outlook to negative, a downgrade that reflects persistent concerns about public debt sustainability.
The negative outlook reflects the credit risks associated with the implementation risks of its upcoming fiscal adjustment efforts, high liquidity risks driven by large gross financing needs in 2021-23, and persistent concerns about debt sustainability despite an expected fiscal adjustment, the rating agency explained.
Arguing that the pandemic has had a negative effect on the local economy and Panamanian public finances, Fitch Ratings downgraded the country's sovereign rating from BBB to BBB-.
Regarding forecasts for 2021, the rating agency expects Panama to experience an economic recovery with a real growth of 9.2%, driven by the economic opening, public investment projects such as the construction of Metro Line 3, exports from the copper mine, and the recovery of domestic consumption. This growth trend is expected to be maintained by 2022, informed the Ministry of Economy and Finance of Panama (MEF).
Arguing that due to the pandemic the current revenues of the General Government have been significantly reduced, Standard and Poor's downgraded Panama's sovereign rating from BBB+ to BBB.
The increase in total debt interest payments as a proportion of the General Government's current revenues is another factor that the rating agency considered when lowering Panama's rating.
Based on the argument that there is no significant fiscal consolidation and sustained economic recovery, the rating agency decided to downgrade the government's long-term issuer rating perspective from stable to negative.
Although the outlook was modified, Moody's decided to maintain the long-term issuer and senior unsecured debt ratings at Baa1.
The National Assembly of Panama approved in third debate a bill that regulates the service of information on the credit history of consumers.
The legislative plenary approved in third debate initiative 424, which modifies Law 24 of 2002 related to this registration system in the Panamanian Credit Association (APC), in order to create a data model or credit information that is fair and balanced between financial agents and credit clients, the Assembly informed.
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 rating agency decided to keep the long-term issuer's note at B2, but changed the risk outlook from stable to negative, arguing that there are greater risks to the country's financing due to increased borrowing requirements.
The affirmation of Costa Rica's B2 rating takes into account the sovereign's levels of wealth above its peers and its dynamic economy.
After power outages were banned, Energuate notified generators that there is a possibility of not paying for all the power they have provided so far.
Weeks ago, Congress approved and published Decree 15-2020, which prohibits cuts in water, electricity, cable TV, telephone and Internet services during the state of calamity and its possible extensions, and which came into effect following the outbreak of covid-19 in the country.
Arguing that a lower economic growth and a higher fiscal deficit are expected due to the effects of the covid-19, the agency decided to modify from BB to BB- the country risk rating.
The situation of the tax burden in the country is another factor affecting Fitch's decision, which was communicated to the Banco de Guatemala through the preliminary bulletin that the agency sent to the authorities.
For Moody's, the Costa Rican government's response to the Covid-19 crisis will put negative pressure on the country's fiscal profile.
According to the rating agency's analysis, the measures include a three-month moratorium on tax payments, a gradual reduction in corporate social benefit contributions and extended credit lines for the companies most affected by the economic recession.
Without clarifying which companies or individuals could apply the measure, the Bukele administration announced a three-month exemption from payment of mortgage loans, services such as water, electricity, Internet, cable and telephone.
These measures may be applied by all those "... natural and legal persons, which are directly affected by the covid-19 pandemic and government institutions must ensure that in their implementation there is no abuse or exploitation". As a result of this announcement, uncertainty has arisen as it is not clear how those "directly affected" will be determined.