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.
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.
"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.
The rating agency maintained BBB's long-term issuer default rating, but decided to change the risk outlook from stable to negative, arguing that the debt burden will continue to increase in 2020.
KEY RATING DRIVERS
The revision of Panama's Outlook to Negative reflects a marked deterioration in fiscal deficits and a significant increase of the government's debt burden, related to accumulation of arrears by previous administration and higher fiscal deficit targets under the modified Fiscal Responsibility Law. In addition, the recent greater-than-anticipated growth deceleration creates additional challenges for fiscal consolidation.
In Costa Rica, a law initiative under discussion seeks to set caps on interest rates on loans, a measure that could lead to a reduction in the offer of credit for debtors classified as higher risk.
As part of a bill being discussed in the Legislative Assembly, the heads of the Central Bank of Costa Rica (BCCR) and the General Superintendence of Financial Entities (Sugef) were asked to give their views on the content of the proposal.
Arguing that management practices were detected that put at risk its solvency and soundness, the Monetary Board decided to suspend the operations of Financiera de Occidente, S.A., an entity that represents 0.35% of the total assets of the local banking system.
Erick Vargas Sierra, head of the Superintendence of Banks (SIB), told Prensalibre.com that "...
According to Fitch Ratings, banks in Nicaragua will continue to be pressured by the remaining effects of an economic contraction for the second consecutive year, a situation derived from the political crisis affecting the country.
Arguing that continuity in economic policies is expected after the change of administration in January 2020, Standard & Poor's maintained the country's credit risk rating at BB-.
From S&P report:
S&P Global Ratings confirmed its long-term sovereign credit ratings of "BB-" in long-term foreign currency and "BB" in Guatemala. The outlook for our long-term ratings remains stable.
Fitch Ratings decided to keep the country's risk rating at B, but changed the outlook from negative to stable, arguing that there are some signs of stabilization of Central Bank reserves and commercial bank deposits.
The revision of the outlook reflects the stabilization of central bank reserves and commercial bank deposits, a significant fiscal adjustment and social security reform that have reduced domestic financing needs and a pronounced external rebalancing that has facilitated the external financing requirement, the rating agency reported.
Standard & Poor's warned that if in the coming months the political environment worsens or access to local and external financing deteriorates again, the debt note could suffer further deterioration.
Moodys confirmed that the country's investment grade is Baa1 with a stable outlook, arguing that the economy has a solid performance and that it reflects stability at the macro level.
In 2020, Moody's expects the growth of the Panamanian economy to recover to 4.5%, boosted mainly by a full year of production in the copper mine, according to the forecasts of the international agency.
Fitch Ratings kept in B+ with a negative outlook, the sovereign debt rating, arguing that "the weaknesses in public finances are reflected and the political stagnation has prevented the timely approval of reforms that address these problems."
The new fiscal rule has not been approved, and the Congressional authorization requirement for foreign loans periodically restricts Costa Rica's financial flexibility, is another of the risk qualifier's arguments.
Because of its financial and competitive strength, the rating agency Fitch Ratings confirmed that the risk rating as an issuer of long-term debt is "A", with a stable outlook.
The ratings reflect an underlying asset that is critical not only for Panama, but also for international trade, as evidenced by its stable volume performance, solid competitive position and well-diversified cargo mix, the ratings company explained.
Up to June 2019, the gross portfolio of the financial system totaled $4.047 million, 20% less than in the same month in 2018, partly explained by the performance of commercial and personal credit.
In terms of composition, the current loan portfolio represented 89.2% of the gross portfolio (89.7% in May 2019), while the portfolio at risk represented 10.8% (10.3% in May 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.
Late loans granted by public banks to small companies amounted to 5.5% in May, 3.8% in the case of medium-size companies and 3.3% in the case of large companies, a situation attributed to the economic slowdown.
The percentage of credits reported by the General Superintendence of Financial Entities (Sugef), refers to loans that went into default for more than 90 days and judicial collection, granted by public entities such as the National Bank, Banco de Costa Rica and Banco Popular.