Standard & Poor's says El Salvador may be downgraded in 6-18 months

SPGI) rating Friday said it could El Salvador’s already negative credit rating fell within six points if it has not made “sufficient progress” on debt reduction days after the government announced plans to repurchase sovereign bonds. Standard & Poor’s maintains El Salvador’s “CCC+” rating, seven notches into the non-investment-speculative sector, four days after its government said it would return Purchase up to USD million-dollar two sovereign bonds, S&P’s valuation is only slightly above the market price.

El Salvador launched on Monday at Offer of bonds due) and200. “We view debt repurchases as opportunistic and akin to a liability management operation, as we believe the government could have met its financial commitments in the near term without this trans action,” S&P said in a statement. rating agencies say there is at least a “one in three” chance of a downgrade if the government makes no significant progress on its debt or is in any problems with their willingness to pay.

Fitch downgraded El Salvador’s sovereign debt to “CC” from “CCC” on Thursday, describing a debt default as likely. S&P said it believed the government could repay the debt next year, but added that delays in securing funding and corrective fiscal measures could hit Investor confidence. It says the ratings reflect For a long time – policy response forecasts are difficult, economic output is low, and the dollarization of this economy has persisted since El Salvador adopted Bitcoin as a fiat currency alongside the U.S. dollar, resulting in low investment and inflexibility.

President Nayib Bukele, who leads the push to accept bitcoin, said Thursday that he will run for re-election 50, although the constitution prohibits the president from being re-elected. 10