Although Panama is tantalizingly close to attaining investment-grade status, an upgrade may elude the country for some time yet.
All Latin American countries except Chile, El Salvador and
Mexico have junk ratings. Moody's and Fitch have Panama just
one notch below investment grade, while Standard & Poor's
has it two slots under, but an upgrade any time soon seems
unlikely as rating agencies take a wait and see approach to the
economic plan of President Martin Torrijos.
Moody's is keeping its Panama country ceiling at Baa1/P-2
(government bonds are rated Ba1) with a stable outlook. It
points to the government's improved near-term growth prospects
and moderate 2005-2006 financing. Fitch also maintains a stable
outlook for Panama. It has rated Panama's long-term sovereign
debt BB+ (short-term debt is rated B) since December 2003. In
June 2004, it set the country ceiling at BBB, creating an
unusual situation. Moody's and Fitch both set Panama's country
ceiling above the sovereign rating, so private-sector issuers
can attain credit ratings as high as BBB.
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