Two months after reducing the rating from B + to B, Standard & Poor's has now reduced the note to B-, with a negative outlook.
From a press release by Standard & Poor's:
OVERVIEW
El Salvador's liquidity has deteriorated significantly because of protracted negotiations between the government and opposition parties on a comprehensive set of fiscal reforms that has weakened debt management.
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
"... 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.
Standard & Poor's has warned of the risk of default in the next two years and reduced the rating for the sovereign debt of Venezuela, the principal debtor of the Colon Free Zone.
From a statement issued by Standard & Poor's:
OVERVIEW
The Venezuelan government's failure to take timely corrective actions to address growing economic distortions has contributed to economic deterioration and shortages of foreign exchange.
In the first six months of 2013 the Salvadoran government's debt rose by $296.1 million with the country risk increasing 104 basis points.
Estimates by the Central Reserve Bank (BCR), reveal that when comparing June 2013 ($14.5469 billion) to June 2012, state commitments increased by $1.2799 billion, as in June last year $13.267 billion was reported.
Low economic growth, a poor fiscal situation, and high exposure to external shocks, are the conditions that could lead to a drop in the sovereign rating to speculative grade level.
Framed in a report entitled "The strong get stronger and the weak weaker," which analyzes the prospects of sovereign risk in the countries of Latin America and the Caribbean, the chapter on El Salvador indicates a high chance that the rating agency will lower the country's credit rating to B1.
Fitch Ratings has downgraded the economic perspective of the rating, making it negative outlook BB.
From the press release by Fitch Ratings:
Fitch Ratings - New York - July 24, 2012: Fitch Ratings affirms its ratings for El Salvador as follows:
- Long-Term Ratings (IDR) in foreign currency and local currency 'BB';
- Short-term rating 'B';
- Country Ceiling: 'BBB-'.
Central American countries still need to improve their economic performance to reach investment grade ratings.
On its Quarterly Country Risk report for June 2010, the Central American Monetary Council (SECMCA), notes that Moody’s Investor Service improved the foreign currency risk ratings for Guatemala and Nicaragua.
Standard & Poors maintained its sovereign debt ratings for El Salvador: “BB” for long-term and “B” for short-term.
The rating company also announced that the outlook remains stable.
In addition, Standard & Poor's affirmed the 'BB' senior unsecured debt rating, and the recovery rating of '3' and 'AAA' transfer and convertibility assessment are unchanged.
Quarterly Report by the Executive Secretary of the Central American Monetary Council, June 2009.
General Situation
During the first months of the year, there has been a deterioration in some economic indicators like foreign investment, remittances and external trade.
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
FTAs, a skilled workforce and the proximity to strategic markets are among the attractions for investors in Nicaragua.
In its April 2009 issue, Revista Summa will publish an exclusive interview with Javier Chamorro, Executive Director of ProNicaragua which is directed at getting to know the advances in attracting foreign direct investment and the plans that will be developed during 2009.
This special report by Fitch examines the credit risk dynamics of El Salvador as it coincides with the end of a political cycle in the country.
Financial pressures and external liquidity, exacerbated by political uncertainty during a pre-electoral period, led Fitch to modify the Prespectives of the IDRs of sovereign risk in the long-term regarding foreign and local currency in October 2008.
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