Research Update: Guatemala Sovereign Ratings Affirmed And Removed From CreditWatch Negative; Outlook Is Stable

Based on recently received information, we understand the coupon payment on Guatemala's 2026 Eurobond was made on Nov. 25, before the end of the 30-day grace period. Therefore, we are removing our 'BB-' long-term foreign currency and 'BB' long–term local currency sovereign credit ratings on Guatemala from CreditWatch, where they were placed with negative implications on Nov. 20, 2020, and affirming the ratings at 'BB-' and 'BB', respectively. The stable outlook reflects our view that despite recent legal challenges, Guatemala will remain committed to timely and full payment of its debt service obligations in accordance with the 'BB-' long-term foreign currency sovereign credit rating. On Nov. 26, 2020, S&P Global Ratings removed its long-term foreign and local currency sovereign credit

...Key rating factors Score Explanation Institutional assessment 4 Political legacy appears in still-weak public institutions, uncertain checks and balances, corruption, and inadequate public services. The rule of law and enforcement of contracts continues to be a challenge in the country. Economic assessment 6 Based on GDP per capita (US$) and growth trends as per selected indicators in table 1. Weighted average real GDP per capita trend growth over a 10-year period is at 1.2%, which is well below sovereigns in the same GDP category. External assessment 3 Based on narrow net external debt and gross external financing needs/(CAR + useable reserves) as per selected indicators in table 1. The country is exposed to significant volatility in terms of trade, partly due to a concentrated export base. Fiscal assessment: flexibility and performance 4 Based on the change in net general government debt (% of GDP) as per selected indicators in table 1. The sovereign has a limited ability to raise general...

Research Update