El Salvador’s Credit Ratings: S&P Global Increases Rating to B- with a Stable Outlook

By Eddie Galdamez  | Updated on Nov 8th, 2023
El Salvador Credit Ratings
Zona Rosa, San Salvador. Image by Morena Valdez.

The S&P Global Ratings agency raised the rating of the Salvadoran debt from CCC+ to B-. Furthermore, S&P Global indicated that the long-term outlook for the country is “stable.”

The reason for the upgrade is the restructuring of the terms of the country’s short-term debt with private banks the Salvadoran Government implemented this year, which reduces the risks of government default for the next two years.

We raised our sovereign credit ratings on El Salvador to B-/B from CCC+/C. The stable outlook reflects the balance of risks between the short-term fiscal relief from the debt reprofiling and the still-high debt service payments due in the coming years. S&P Global Ratings agency

El Salvador’s Credit Ratings in 2023

El Salvador’s Credit Ratings in 2023 are B- with a stable outlook from Standard & Poor’s, CCC+ from Fitch, and Caa3 with a stable outlook from Moody’s.

The latest update on Salvadoran credit rating was done by S&P Global Ratings on September 7, 2023. S&P Global increased the rating for El Salvador to B- with a stable outlook from CCC+.

El Salvador Credit Ratings
Agency Rating Outlook Date
Standard & Poor’s B- Stable September 7, 2023
Fitch Rating CCC+ N/A May 5, 2023
Moody’s Caa3 Stable February 3, 2023

The implementation of Bitcoin as a legal tender, which the Bukele administration has no plans to discontinue, has contributed to the rating agency’s perspective on El Salvador’s credit ratings. In September 2022, El Salvador became the first country to make Bitcoin a legal tender.

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

Standard & Poor’s Rating

On September 7, 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.

Standard & Poor’s Rating for El Salvador since 2014
Date Rating Outlook
September 7, 2023 B- Stable
May 10, 2023 CCC+ Stable
May 9, 2023 SD Negative
June 1st, 2022 CCC+ Negative
October 21st, 2021 B- Negative
December 28th, 2018 B- Stable
December 14th, 2017 CCC+ Positive
October 3rd, 2017 CCC+ Stable
May 5th, 2017 CC Negative
April 13th, 2017 CCC- Negative Watch
December 8th, 2016 B- Negative
October 16th, 2016 B Negative Watch
October 6th, 2016 B+ Negative Watch
December 22nd, 2014 B+ Staple

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.”

Fitch Rating for El Salvador since 2015
Date Rating Action
May 5, 2023 CCC+ N/A
January 2, 2023 CC Affirmed
September 15, 2022 CC Doungrade
July 13, 2022 CCC Under Criteria Observation
February 9, 2022 CCC Downgrade
April 27, 2021 B- Affirmed
April 30, 2020 B- Affirmed
June 11, 2019 B- Affirmed
June 13, 2018 B- Affirmed
October 6, 2017 B- Upgrade
April 10, 2017 CCC Downgrade
February 1, 2017 B- Downgrade
July 7, 2016 B+ Affirmed
July 9, 2015 B+ Downgrade
July 11, 2014 BB- Affirmed

Moody’s Rating

El Salvador’s credit rating with Moody’s stands at Caa3 with a stable outlook. The credit agency confirmed the rating on February 3, 2023.

The credit agency stated that it had changed the country’s economic outlook because it “reflects Moody’s view of a decreased risk of a credit event in the near term, following the distressed exchange in 2022 and the recent repayment of the 2023 international bond.”

The affirmation of the Caa3 rating reflects Moody’s view that persistently high financing needs, a lack of access to international capital markets, low debt affordability, and the lack of a credible medium-term fiscal and financing framework will continue to weigh on creditworthiness.” Moody’s.

Moody’s Rating for El Salvador Since 2015
Date Rating Outlook
February 3, 2023 Caa3 Stable
May 4, 2022 Caa3 Negative
July 30, 2021 Caa1 Negative
February 5, 2021 B3 Negative
November 16, 2020 B3 Under Review
March 12, 2020 B3 Positive
February 23, 2018 B3 Stable
April 13, 2017 Caa1 Stable
November 7, 2016 B3 Negative
Ausust 11, 2016 B1 Negative
November 19, 2015 Ba3 Negative

El Salvador Credit Ratings

In 2023, 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.