S&P downgrades El Salvador

S&P said it lowered the long-term foreign- and local-currency sovereign credit ratings on El Salvador to CCC- from B-.

The ratings are on CreditWatch with negative implications.

The agency also said it lowered the short-term foreign- and local-currency sovereign credit ratings to C from B.

The country's AAA transfer and convertibility assessment is unchanged.

El Salvador's Congress recently failed to approve a budgetary allocation that was needed to cover payment of financial commitments for pension-related debt, S&P explained.

As a result, the government missed payments on financial obligations coming from the Certificates for Pension Investments (CIPs) due between April 7 and April 10, 2017, adding up to $28.8 million, the agency said.

Because the CIP's maturities have no stated grace period, S&P said it treats these obligations as having an imputed five business-day grace period.

The negative watch reflect an expectation for further downgrades to SD (selective default) if the political stalemate continues to block the approvals for budget allocation during the following week, the agency said, and if the government remains unable to fund these missed payments.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.