Fitch: Colombian Companies Facing Increasing Liquidity Pressure

Colombian companies are facing liquidity pressures driven by inflation and high capital costs, according to Fitch Ratings’ Colombia Comparative Statistics Book: 2023. The report contains detailed financial data on 57 corporates rated in Colombia (BB+/Stable).

“Fitch-rated Colombian corporates’ liquidity positions and coverage ratios deteriorated in 2022, which was marked by higher costs of capital, accompanied by double-digit inflation, pressuring cost structures,” said Jose Luis Rivas, Fitch Ratings Senior Director.

Medians for liquidity metrics, measured as cash plus cash flow from operations/short-term debt, for all rating categories in the portfolio declined by 14% in 2022, on average. Medians for coverage, or EBITDA/gross interest expense, declined by 37%, on average. Median leverage metrics for all rating categories increased in 2022, except for ratings in the ‘AAA(col)’ category, following a year of increased debt needs. Capex had an upward trend, with most companies exhibiting capex/depreciation, depletion and amortization of over 1.5x, as efforts focused on investments after delays from the pandemic.

This special report includes a list of key financial indicators and median ratios by rating category. The sustainability of these credit-protection measures is evaluated over time to determine an issuer’s ability to meet financial obligations in a timely manner.

For more information, a special report titled “Colombian Comparative Statistics Book: 2023” is available on the Fitch Ratings website at www.fitchratings.com.