El Salvador Credit Ratings: S&P maintains El Salvador’s rating at B- with a Stable Outlook

On Thursday, April 15th, the S&P Global Ratings agency declared that it would uphold El Salvador’s sovereign risk rating at B-, maintaining a stable outlook.

S&P Global is the first credit rating agency to respond following the Salvadoran government’s announcement of its reentry into the international market after a four-year hiatus.

El Salvador’s Credit Ratings in 2024 are B- with a stable outlook from Standard & Poor’s Global Ratings agency, CCC+ from Fitch, and Caa3 with a stable outlook from Moody’s.

Implementing Bitcoin as a legal tender 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, which the Bukele administration has no plans to discontinue,

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.

Moody’s Rating

El Salvador’s credit rating with Moody’s stands at Caa3 with a stable outlook. The credit agency reconfirmed the rating on February 2, 2024.

The credit agency stated that “The lack of a credible medium-term fiscal and financing framework, along with weak governance, undermine policy predictability and continue to weigh on creditworthiness.”

Without a clear medium-term fiscal strategy and continued reliance on costly domestic debt, El Salvador’s relatively large financing needs have eroded its fiscal strength despite substantial progress on narrowing the fiscal deficit and maintaining it at a level that supports stable debt metrics. Moody’s.

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

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.