With the aim of making the classification of debtors more flexible and reducing the risk of non-payment, in a context where delinquent loans keep on rising, Costa Rica authorized the modification of two regulations that apply to entities in the financial system.
The General Superintendence of Financial Entities (Sugef) and the National Council of Supervision of the Financial System (Conassif), informed that changes were made to the "Regulation for the qualification of debtors" and the "Regulation on management and evaluation of credit risk for the development banking system", which ultimately aim to give access to new credits to about 63 thousand people.
In Costa Rica, low economic activity and rising unemployment explain the 25% increase reported between February 2018 and the same month of 2019 in the value of assets acquired by banks to recover loans.
Figures from the General Superintendence of Financial Entities (Sugef) specify that between February 2018 and the same month of this year, the amount of goods and securities acquired by financial entities because people and companies did not pay their loans increased from $425 million to $533 million.
Guatemalan businessmen assure that the change from Stable to Negative made by Fitch Ratings in the country's risk perspective should be taken seriously, since investments could stagnate.
On April 11, Fitch announced that it maintained its "BB" rating for long-term foreign currency debt default, but decided to modify the outlook because the country reflects political tension and greater uncertainty in agents, as well as a constant erosion in the government's low tax collection.
Fitch Ratings confirmed the long-term foreign currency debt default rating of "BB", but changed the outlook from stable to negative.
The review of Guatemala's negative outlook reflects political tension and greater uncertainty in agents, as well as a constant erosion in the government's low tax collection, the rating agency argued.
Moody's assigned to Empresa de Transmisión Eléctrica de Panamá a Baa1 issuer rating, arguing that it reflects key credit strengths and is the only electricity transmission company in the country.
Gilberto Ferrari, general manager of Empresa de Transmisión Eléctrica (Etesa) explained to Panamaamerica.com.pa that "... This qualification is one of the most important milestones in the history of the company and the energy sector of our country.
Because of its strong and stable macroeconomic performance, Fitch confirmed the long-term foreign currency rating at 'BBB', with a stable outlook.
For the risk qualifier, the country's macroeconomic performance has driven a sustained increase in per capita income, and it also forecasts that GDP growth will recover to 5.8% in 2019 and 5.5% in 2020, above countries with similar ratings.
After Nicaragua Financia Capital S.A. declared that no funds were available to meet its obligations, the entity announced that it will propose to investors to renegotiate the terms.
On February 8, the Superintendence of Banks and Other Financial Institutions (Siboif) decided to revoke the authorization granted to Financia Capital, S.A. to make a public offering of fixed income securities.
Because Financia Capital S.A. does not have the funds available to meet its obligations, it was revoked the authorization to make a public offering of fixed income securities.
The Superintendence of Banks and Other Financial Institutions (Siboif) informed that its authorization was revoked because "... the representatives of the issuer Financia Capital S.A.
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 & Poors raised the rating from CCC+/C to B-/B, with a stable outlook, arguing that in the next three years the fiscal deficit will be moderate, and its debt levels will remain unchanged.
From the Standard & Poors report:
RATINGS
Foreign Currency: B-/Stable/B
Local Currency: B-/Stable/B
For further details see Ratings List.
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."
The rating agency reduced the long-term and senior unsecured bond issuer ratings of the Costa Rican government from Ba2 to Ba1 and changed the outlook to negative.
According to Moody's, among the main factors behind the decline is the continued and projected worsening of debt metrics in the back of large deficits despite fiscal consolidation efforts.
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.
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.
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.
Rocio Aguilar, Finance Minister, explained to Crhoy.com that Moody's warning is "...