Research Update: Banco Agricola S.A. 'B-/B' Ratings Affirmed; El Salvador BICRA Group Revised To '9' From '8' On Higher Risks For Banks

On June 1, 2022, S&P Global Ratings downgraded El Salvador to 'CCC+' from 'B-' due to the rollover risks on elevated short-term debt and the need to secure funding for its high fiscal deficits and an external bond amortization of $800 million due in January 2023. As a result, we revised our Banking Industry Country Risk Assessment (BICRA) on El Salvador to group '9' from '8' and revised downward the industry risk score to '8' from '7'. We kept our economic risk score remained unchanged at '9' and kept the anchor for banks operating in El Salvador at 'b+'. Both the economic and industry risk trends remain negative. The higher industry risk reflects a weakening sovereign and increasing political uncertainty

...- On June 1, 2022, S&P Global Ratings downgraded El Salvador to '###+' from 'B-' due to the rollover risks on elevated short-term debt and the need to secure funding for its high fiscal deficits and an external bond amortization of $800 million due in January 2023. - As a result, we revised our Banking Industry Country Risk Assessment (BICRA) on El Salvador to group '9' from '8' and revised downward the industry risk score to '8' from '7'. We kept our economic risk score remained unchanged at '9' and kept the anchor for banks operating in El Salvador at 'b+'. Both the economic and industry risk trends remain negative. - The higher industry risk reflects a weakening sovereign and increasing political uncertainty that could affect investor confidence, damaging banks' access to wholesale financing and increasing their funding costs. Additionally, we think the more challenging economic conditions could also impair banks' liquidity because deposits could drop. - Finally, we affirmed our 'B-/B'...

Research Update