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.

The bonds, which mature on March 15, 2029, were issued on October 3 and have a coupon of 4.5%.

The bond issuance was made to fund governmental liability management transactions and for general budgetary purposes, as characterized by the big three credit rating agency. This included roughly $312 million to purchase outstanding notes due 2019 with a 7.4% coupon.

The company’s rating for the bonds match its BBB long-term, foreign-currency issuer default rating (IDR) for the nation of Colombia, which it affirmed in May.

“The bond rating would be sensitive to any changes in Colombia’s long-term, foreign-currency IDR,” said Fitch in a statement.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC served as joint book-running managers for the bond offering.