Fitch: LatAm Risks Skew Towards the Downside

NEW YORK--(BUSINESS WIRE)-- Slow growth, deteriorating funding conditions, and fiscal pressures have led to more pronounced risks facing Latin America, according to a new Fitch Ratings report.

'Key test for governments will be to adjust to the new operating environment, diversify economies, and implement reforms to gain competitiveness. Until that happens, lower growth may be the 'new normal' for the region,' said Rui J Pereira, Managing Director and Regional Credit Officer.

In addition to slowing growth and fiscal pressures, risk aversion has also increased with weaker issuers facing limited access to international debt markets. However, market conditions vary significantly by issuer profile and the regional political/economic conditions, with Brazil the most negatively affected in recent quarters.

Capital expenditures aimed at growth that hasn't materialized, together with slower revenue expansion, has also resulted in rising leverage for some corporates in the region. Weakening operating trends coupled with challenging financing conditions is likely to pressure regional corporate ratings over the short-term.

Political risk has also grown, with several administrations facing weaker approval ratings in part due to corruption investigations.

Increasing risks have resulted in downgrades outpacing upgrades and caused the percentage of issuers on Negative Outlook to rise. Approximately 18% of Fitch rated LatAm credits are on Outlook Negative and principally concentrated in Brazilian corporates and financial institutions.

Key risk changes from 2014 include:

--China slowdown and lower commodity prices;

--Slowing domestic growth;

--Weakening funding conditions;

--High leverage;

--Geopolitical risk;

--Fiscal challenges and reforms.

For more information, a special report titled 'LatAm Risk Radar' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Risk Radar Latin America 1Q15

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864989

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings, Inc.
Rui Pereira
Managing Director
+1212-908-0766
33 Whitehall Street
New York, NY 10004
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

You May Also Be Interested In

• Television Star and Restaurateur Lisa Vanderpump Hosts Grand Opening of Wolf by Vanderpump at Harveys Lake Tahoe
• Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Ocugen, and QuidelOrtho and Encourages Investors to Contact the Firm
• Faraday Future Receives Letter from Nasdaq Regarding Form 10-K Filing