S&P changes two Paraguayan banks to negative

Standard & Poor's said it revised its outlook on Vision Banco Saeca and Banco Continental Saeca to negative from stable.

In addition, the agency affirmed its BB- and BB ratings on these banks, respectively. It also affirmed the BB/B ratings on Banco Bilbao Vizcaya Argentaria Paraguay SA (BBVA Paraguay) and the BB- ratings on Banco Regional Seaca. The outlook on these two banks remains stable.

S&P maintained its Bicra on Paraguay (foreign currency: BB/positive/B; local currency: BB/positive/B) at group 8, with an anchor for banks operating in the country at bb-. It also maintained its 8 economic and industry risk scores but revised the Bicra economic risk trend to negative from stable and kept the industry risk trend as stable.

In the agency’s view, the Paraguayan financial system's credit risk is rising amid high dollarization, thanks to which almost a half of dollar-denominated loans in the system are concentrated in cyclical sectors. S&P considers the latter could pose additional risks during economic slowdown, lower commodities prices, and sluggish regional economy. If the negative economic risk trend materializes, it would revise the Bicra to group 9 from group 8 and the anchor to b+ from bb-.

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