El Salvador, Government of
Credit Opinion: Government of El Salvador - Caa3 negative: Update following methodology update
Issuer Comment: Government of El Salvador: Second debt buyback amounts to a distressed exchange, small transaction amount illustrates liquidity stress
Issuer Comment: Government of El Salvador: Debt buyback amounts to a distressed exchange, second buyback planned
Announcement of Periodic Review: Moody's announces completion of a periodic review for a group of Sovereign entities in Americas, Middle East and Africa
Issuer In-Depth: Government of El Salvador – Caa3 negative: Annual credit analysis
Announcement of Periodic Review:
Moody's announces completion of a periodic review of issuers including El Salvador, Government of
New York, August 07, 2019 -- This publication is for information only, and does not announce a rating action.
Moody's Investors Service ("Moody's") reviews all of its ratings periodically in accordance with regulations -- either annually or, in the case of governments and certain EU-based supranational organisations, semi-annually. This periodic review is unrelated to the requirement to specify calendar dates on which EU and certain other sovereign and sub-sovereign rating actions may take place.
Moody's conducts these periodic reviews through portfolio reviews in which Moody's reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. Since 1st January 2019, Moody's issues a press release following each periodic review announcing its completion.
Moody's has now completed the periodic review of a group of issuers that includes El Salvador and may include related ratings. The review did not involve a rating committee, and this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future; credit ratings and/or outlook status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
The credit profile of El Salvador (issuer rating B3) is supported by the country's "Low (+)" economic strength, which reflects an economy dependent on remittances and low-value added exports to the US, low GDP growth rates derived from low investment and low productivity rates and a relatively small size economy. El Salvador's "Low" institutional strength reflects weak fiscal outcomes given a track record of political polarization and congress gridlock, and relatively week World Bank governance indicators, particularly in Rule of Law. The country's "Low (+)" fiscal strength reflects important weaknesses such as high government debt ratios, a rising interest burden and persistent fiscal deficits. The country's dollarization limits exchange rate risk from affecting public finances. El Salvador's "High (-)" susceptibility to event risk is driven by domestic political risk which has affected government liquidity risk, by preventing agreements to access long-term debt. Political risk will remain elevated until a track record of improved political relations among key stakeholders and legislative agreements is further established.
This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Sovereign Bond Ratings published in November 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Ariane Ortiz-Bollin
Asst Vice President - Analyst
Sovereign Risk Group
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Yves Lemay
MD - Sovereign Risk
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