El Salvador Credit Ratings: Standard & Poor’s Global confirms El Salvador’s B- rating

The credit rating agency S&P Global has reaffirmed El Salvador’s B- rating with a stable outlook, a grade it has maintained since November 2023 following the country’s short-term debt restructuring.

S&P was the first major agency to upgrade El Salvador from the “C” category, signaling a reduced immediate risk of default.

As of August 2025, El Salvador’s Credit Ratings are B- with a stable outlook from Standard & Poor’s Global Ratings Agency, B- with a stable outlook from Fitch Ratings, and B3 with a stable outlook from Moody’s.

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Standard & Poor’s Rating

In August 2025, S&P Global Ratings reaffirmed El Salvador’s sovereign debt rating, citing support from an agreement with the International Monetary Fund, but warned that the country faces fragile fiscal and pension conditions that threaten its long-term stability.

The agency stated that the rating, reaffirmed on August 20, reflects a balance between the government’s “still challenging fiscal situation” and improvements in public security, which are expected to stimulate economic growth.

S&P also noted more favorable conditions for El Salvador to access financing from multilateral institutions.

These factors, it added, should help “contain sovereign default risks over the next 12 to 18 months.”

Despite that outlook, S&P cautioned that El Salvador’s credit quality remains constrained by a weak institutional framework and economic management.

The agency highlighted that the country has defaulted twice on pension obligations in the past decade, underscoring the strain on its public finances.

The report also pointed to modest economic growth, which has kept wealth indicators below those of peers with similar ratings and has fueled fiscal weakness and high government debt levels.

S&P stated that if President Nayib Bukele’s administration fulfills its commitments tied to the IMF agreement, El Salvador’s ability to meet its long-term debt obligations could improve.

Fitch Ratings

In early January, after El Salvador and the International Monetary Fund (IMF) reached a technical agreement for a 1.4 Billion loan, the Fitch Ratings Credit Agency raised El Salvador’s credit rating to B- from CCC+, with a stable outlook.

The Fitch Ratings reaffirmed the January credit rating increase in late April 2025.

In its report, Fitch also noted that “The rating is also supported by lower inflation and a higher GDP per capita than peers but is constrained by moderate growth, high debt levels and interest burdens, and the 2023 pension related debt exchange, which Fitch deemed as a distressed debt exchange.”

Fitch noted that El Salvador’s non-financial public sector fiscal deficit narrowed to 4.4% of GDP in 2024 and is projected to fall to 2.1% by 2026.

The agency said spending cuts and improved tax collection will drive fiscal consolidation, a measure included in the 2025 budget and aligned with commitments to the International Monetary Fund.

However, Fitch warned that non-financial public sector debt reached 87.2% of GDP in 2024 and is expected to remain high, rising slightly to 87.8% in 2025.

While a gradual decline is forecast, supported by primary surpluses, debt levels remain well above the median for B-rated countries, which stands at 52.1%.

The agency also highlighted concerns over the country’s high-interest burden, which accounted for 17.2% of government revenues in 2024, limiting the potential for a rating upgrade.

Moody’s Rating

In November 2024, the rating agency Moody upgraded El Salvador’s credit rating from Caa3 to B3 and maintained its stable outlook for the country.

The upgrade of the ratings to B3 reflects our view that the sovereign’s credit profile has benefited from recent liability management operations that have significantly reduced external amortizations leading to a material decrease in repayment risk and alleviating near and medium-term liquidity pressures. Moody’s.

The Salvadoran government has made three bond buybacks in 2024, and the Ministry of Finance states that this has saved the country $745 million.