Moody's slices El Salvador

Moody's Investors Service said it downgraded the government of El Salvador's long-term foreign-currency issuer rating and long-term foreign-currency senior unsecured debt ratings to Caa3 from Caa1.

“Moody's decision to downgrade El Salvador's ratings reflects an increased probability of a credit event – restructuring, distressed exchange or default – with relatively high severity, as the sovereign faces a challenging debt amortization schedule with bond maturities in 2023 and 2025 in a context of continued funding stress and persistently high financing needs,” the agency said in a press release.

“The downgrade of El Salvador's rating is driven in good part by the lack of a credible financing plan, a factor that heightens credit risks derived from restricted market access given the distressed yields on El Salvador's external debt,” Moody’s added.

The outlook is negative.

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