Moody’s ups El Salvadoran banks

Moody's Investors Service said it upgraded the long-term foreign currency issuer rating of Banco de Desarrollo de El Salvador (Bandesal) to B3 from Caa1 and Banco Agricola, SA's long-term foreign currency deposit rating to B1 from B2.

The agency also upgraded the long-term foreign currency debt rating of Banco Agricola’s $300 million senior debt issuance due in 2020, issued through a Cayman Islands-based trust, Agricola Senior Trust (AST), to B1 from B2. AST is unconditionally and irrevocably guaranteed by Banco Agricola.

At the same time, both banks' standalone baseline credit assessments were upgraded to b3 from caa1, and Banco Agricola's adjusted baseline credit assessment was upgraded to b1 from b2.

The deposit and issuer ratings carry stable outlooks.

Moody’s said the actions follow its Feb. 23 upgrade of El Salvador's government bond rating to B3 from Caa1 with a stable outlook, which considered the government's significantly reduced liquidity risks as political agreements have led to legislative assembly approval of long-term government financing and pension reform.

Consequently, the agency explained, the risk that political brinkmanship will lead to missed debt payments has diminished materially.

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