S&P bond ranking upgrade "unlikely" for Panama
(primapanama.blogs.com) According to Sifón Arévalo, a Standard and Poor's Analyst, Panama is unlikely to receive invest grade ranking in the next few years as anticipated by various local analyst in recent months. Why does it matter? "An “investment grade” rating is the best that a country can receive in the international rankings that assess credit risks. It is awarded to nations with a low risk of defaulting on its debt obligations, stability and positive economic prospects. The countries with this rating tend to get an immediate major increase in foreign investment and lower costs for debt financing, both in the public and private sectors. In Latin America, only four countries currently have investment grade: Chile, Mexico, Brazil and Peru. In 2007, some local analysts raised the possibility that Panama would join the club in late 2009 or early 2010."
In other words, with Panama embarking on a mega infrastructure project an investment grade ranking pretty much assures there will be no problems with financing the project in the future. Without it there will certainly be challenges in acquiring huge amounts of debt on top of existing high debt. “There are important issues that take time,” Sifón Arévalo said. “One is the issue of institutional strengthening. The country has made important progress in this area in recent years, and key reforms have been passed in this administration that have helped improve the rating. But we need these gains to endure over time.”
