Last year Fitch Ratings downgraded almost 40% of the 198 corporates in Latin America that it assigns international ratings. Its recently released annual analysis, “Latin America Comparative Statistics Book – 2016,” revealed the scope of the damage, with Brazilian firms taking the brunt of the punishment.
In a nation of 200 million where the economy continues to contract, 56 corporates were hit with downgrades. This represents that vast majority of the 77 total ratings downgrades in the region, with most of the impact coming for firms within the agency’s BB and B rating classifications.
“Key findings indicate that Latin America corporates faced several challenges during 2015 as cash flows plummeted as a result of weak commodity prices and devaluating currencies during a time where financing alternatives remained scarce,” said Fitch Ratings in a statement.
While the study only looks at 2015 actions taken by the big-three rating agency, the calendar flipping hasn’t changed everything. Nor has Brazil been the only location facing widespread problems.
Colombia, while not a corporate, saw its sovereign rating put on negative watch in June. The fallout from that adjustment then spilled over to the state-controlled oil company Ecopetrol and two of the country’s biggest banks, Bancolombia and Banco de Bogotá. The cities of Bogotá and Medellín similarly got stuck with negative actions following Fitch changing its outlook on the nation as whole.