El Salvador Credit Ratings: Moody’s Upgrades El Salvador’s Rating to B3 With a Stable Outlook

On Tuesday, November 26, the credit rating agency Moody raised El Salvador’s credit rating to B3 from Caa1, with a stable outlook.

Moody’s B3 rating reflects El Salvador’s moderate economic strength. It cites improved growth and investment prospects due to structural security improvements and a significant boost in government liquidity, reducing the country’s vulnerability to event risks.

El Salvador’s Credit Ratings going into 2025 are B3 with a stable outlook from Moody’s, B- with a stable outlook from Standard & Poor’s Global Ratings agency, and CCC+ from Fitch.

SEE ALSO: Financial Inclusion, a problem that affects many Salvadorans and businesses

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.

Standard & Poor’s Rating

On September 2023, the rating agency Standard and Poor’s upgraded El Salvador’s credit rating from CCC+ to B- and maintained its stable outlook for the country.

“We raised our sovereign credit ratings on El Salvador to B-/B because we consider that the government’s recent program to gradually refinance its short-term debt with local banks will reduce rollover needs and mitigate the risk of a default over the next two years,” noted the credit rating agency.

Fitch Ratings

The risk rating firm Fitch Ratings raised El Salvador’s credit rating in three notches, going from CC in its February report to CCC+ in the document they shared on May 5.

El Salvador’s CCC+ rating reflects fiscal and external liquidity positions that have improved relative to Fitch’s previous expectations.

Fitch highlights that the improvement in the rating is due in large part to the payment on time and with the interest of the 2023 bond made by the Government, as well as to the success in the debt repurchase operations while affirming that another event of default “it no longer seems likely.”

El Salvador Credit Ratings

El Salvador’s credit ratings are at some of the lowest possible levels. According to the rating agencies, the Salvadoran debt has junk status with imminent default and little prospect for recovery.

The implementation of Bitcoin as a legal tender and the current situation between the Nayib Bukele administration and the United States are two other reasons El Salvador will continue to have a low credit rating.