From Rating and Qualified Firms

 

Recently, the rating companys Fitch Ratings, presented its latest report on the credit outlook for the Republic of Panama. Fitch thinks the same as its peers, Standard & Poor's and Moody's, the country's credit quality remains "investment grade". However, Fitch clearly put on the table a negative outlook on Panama's future credit performance. Moody's also recently gave Panama a negative outlook, but is not as explicit in its evaluation as Fitch.

In summary, these rating agencies believe that, although Panama is still a good credit, there are difficulties that the government is not addressing, which may make it difficult for the country to remain a good payer in the future.

The Fitch report was like a shot in the church. Many economists, bankers and financiers are now trying to better understand what is happening, because it may affect them, and not a little.

For the majority, the discordant note from Fitch has been an awakening to an unknown reality, that there is someone who is concerned about the quality of the country's credit and that, right or wrong, it should be a citizen's concern. The government's actions are judged and evaluated, but the bad or good grade is to the country, it is to all of us.

A bad grade or a recurrent negative performance could lead the country to lose the designation of "investment grade", which in a nutshell is to be a good payer. This distinction allows institutional investors such as insurance companies, sovereign wealth funds and banks that privilege investment security rather than rate of return, to buy these bonds. This allows the placement of the debt in a larger universe of clients and from there we can place them at lower rates than if we did not have this "investment grade".