|Posted by haimdatsawh on June 12, 2012 at 9:20 AM|
TEXT-S&P: 'BB' category sovereigns in South and Central america
Mon Jun 11, 2012 9:58pm IST
June 11 - Six sovereigns in Latin America have 'BB' category ratings, which
on the surface might imply that the countries are similar in many respects--from
their economies to their political systems--said Standard & Poor's Ratings
Services in a report titled "A Comparative Look At 'BB' Category Sovereigns In
South And Central America".
The reality, it turns out, is that even though the six share some
characteristics, there are also many differences between them.
"Our report highlights the complex interplay of factors that can land
distinctly different sovereigns in the same rating category and illustrates
how the vicissitudes of the global economy can support or constrain a
sovereign's rating," said Standard & Poor's credit analyst Olga Kalinina.
The three South American countries--Bolivia, Paraguay, and Suriname--have
benefited greatly from high world prices for their primary commodities:
natural gas, soya, and gold. Combined with rising industrial production, this
has boosted their economies, and, in the case of Bolivia and Suriname,
government revenues as well.
By contrast, the three less commodity-rich sovereigns in Central America were
hurt more by the global recession and have recovered from it slowly. Costa
Rica's, El Salvador's, and Guatemala's public finances, which were already
weak, have worsened as their budget deficits have widened and their government
debts climbed. Nevertheless, these three countries have maintained relatively
stronger public institutions and continued pursuing predictable and
market-oriented policies. This has partially offset their economic
Bottom line, the two sets of countries seem to be moving along opposite
trajectories. On balance, creditworthiness is improving in Bolivia, Paraguay,
and Suriname--we've upgraded all three to the 'BB' category from 'B' in the
past two years, as their governments have proven able to cash in on the
favorable commodities cycle.
The Central American sovereigns, by contrast, are facing rising credit risks.
We have a negative outlook on our 'BB' rating on Guatemala, and we have
downgraded El Salvador by two rating notches over the past three years. These
countries are trying to stave off rising credit risks.
The report is available to subscribers of RatingsDirect on the Global Credit
Portal at www.globalcreditportal.com. If you are not a RatingsDirect
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280
or sending an e-mail to email@example.com. Ratings
information can also be found on Standard & Poor's public Web site by using
the Ratings search box located in the left column at www.standardandpoors.com.
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