Fitch rating agency praised Peru for having room to implement countercyclical policies and increase spending due to the nation's robust fiscal reserves and low government debt burdens, in contrast with most of Latin America.
The head of Fitch's Latin America Sovereigns Group, Shelly Shetty, noted that, with exception of Peru and southern neighboring Chile, fiscal room to stimulate domestic economies is more constrained in the remaining countries from the region.
In October last year, the United States-based agency raised Peru’s credit rating from BBB to BBB+, taking into consideration the country’s stable fiscal balance sheet and the growing international demand for its energy and mineral resources.
In a
report released last week, Shetty went on to underline that negative sovereign rating actions exceeded positive actions in the first half of 2014 in Latin America and the Caribbean.
In this regard, the sovereign analyst stressed the rating outlooks for most countries in the region remain stable; then she said negative bias remains for ratings as currently more countries have negative outlooks than positive Outlooks.
Within that framework, Fitch’s study does not anticipate broad-based negative rating actions either as several Latin American countries have adequate external liquidity and credible policies in place to confront potential higher international volatility.
“Market access remains relatively robust for most countries,” Fitch said, while it has downgraded the sovereign ratings of Bermuda, Guatemala and Venezuela by one notch each during the first half of this year.
Nevertheless, Fitch also took two positive rating actions in the region, upgrading Jamaica to 'B-' from 'CCC' and assigning a Positive Outlook to Paraguay.
Currently, only Paraguay has a Positive Outlook while Argentina (Local IDR only), Aruba, El Salvador and Venezuela have Negative Outlooks.
“Softer commodity prices, China's slowdown, slower domestic demand and country-specific factors are clouding the near-term prospects of the Latin American region,” Shetty noted.
(END) LOG/JJN/AQR/LOG
Published: 7/30/2014