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.
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+.
| 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.
| 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.”
| 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.
| 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.
