Related Content: Latin American Corporates Quarterly Rating Trends Dashboard – July 2024

Downgrades and upgrades occurred during 2Q24 in nearly every Latin American country and corporate subsectors. There were four fallen angels and one rising star during 2Q24, compared to no cross-over credits during 1Q24 and three fallen angels and no rising stars during 4Q23.

Most of the downgrades to speculative-grade from investment-grade were due to the downgrade of Panama’s sovereign rating to ‘BB+’ from ‘BBB-’. The deteriorating operating environment strengthened the linkage between company credit profiles and the sovereign rating. Either full or partial corporate government ownership of the company or its systemic receipt of government subsidies and financial support was an additional consideration. The rising star was a Mexican company in the building & construction sector.

As of June 2024, three publicly rated issuers in our Latin American corporates portfolio were rated ‘BBB-’/Negative and at risk of falling into high-yield territory. Only one was rated ‘BB+’/Positive, indicating it could be upgraded to investment grade.

For more information on corporate issuers on the edge of different rating categories see Global Corporate Credits on the Cusp Monitor – June 2024.

In the statement the utility submitted to the regulators, it said that:

“The reduction of one notch in the international rating of EPM by the agency Fitch Ratings, presented on August 13, has not generated, to date, acceleration of financial obligations, breach or activation of covenants, nor has it implied the requirement of additional guarantees by the current financial creditors.

On the other hand, since Tuesday, August 11, a series of teleconferences have been held with financial creditors responding to concerns about the corporate governance situation.

In relation to the events that led to the downgrading of its credit rating, EPM has received notification from some local and international financial entities of temporary suspension of commercial relations, resulting in the reduction of quotas and credit limits in operations such as loans, exchange risk hedges and bank guarantees, without to date, this having had a material effect on liquidity and EPM operations.”

See Also:

• EPM’s Board of Directors Resign En Masse, Creating Crisis For Mayor Daniel Quintero

• Fitch Downgrades EPM, Citing “Deterioration Of Corporate Governance” After Medellín Mayor’s Usurpations