El Salvador Credit Ratings: What Fitch’s Latest Assessment Means for the Country

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

Fitch Ratings

In December 2025, Fitch Ratings affirmed El Salvador’s long-term foreign-currency sovereign debt rating at B- with a stable outlook.

Fitch applied its new sovereign rating criteria, introduced in September 2025, removing the previous Under Criteria Observation from El Salvador’s rating as part of the methodology transition.

Under the updated model, Fitch now includes formal recovery assumptions in its sovereign evaluations, making this the first time default-scenario recovery prospects directly shape the agency’s rating decisions for national governments.

Fitch assigned El Salvador a recovery rating of RR4, indicating it expects an average recovery in a hypothetical default, a judgment driven mainly by the country’s heavy debt load and lack of meaningful mitigating factors.

The agency noted that senior unsecured debt remains aligned with the sovereign’s long-term rating because projected recoveries do not justify a different assessment under the revised framework.

Fitch warned that El Salvador’s debt is expected to reach 87% of GDP by the end of 2024, a level that continues to weigh on long-term credit prospects and restrains upward rating momentum under current fiscal conditions.

In governance and sustainability factors, Fitch reported that El Salvador retains an ESG relevance score of 5 for political stability, rule of law, institutional quality, and corruption control—categories the agency deems highly influential in sovereign risk analysis.

These scores reflect the weight of the World Bank Governance Indicators in Fitch’s model.

Fitch said these governance indicators continue to play a critical role in determining rating stability, especially for countries with limited fiscal space and high financing needs.

The agency warned that weakening public finances, growing funding requirements, or declining external liquidity that undermines debt-servicing capacity could prompt a downgrade in future reviews.

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.

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.

El Salvador Credit Ratings

El Salvador’s credit ratings matter because they shape the cost of borrowing, influencing national budgets, investment decisions, and long-term economic planning across all sectors.

Lower ratings raise financing costs, limit access to international markets, and pressure public services, infrastructure development, and fiscal stability nationwide.

These ratings also affect daily life in El Salvador by influencing interest rates, job creation, business confidence, and the overall cost of living, ultimately shaping household economic security.