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Moody’s highlights that the new rating “reflects the moderate economic strength of El Salvador”
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The firm sees a structural improvement in the security situation and the government’s liquidity.
On Tuesday, November 26, the credit rating agency Moody’s announced an improvement in El Salvador’s risk rating, raising it from Caa1 to B3. This new rating, which continues to maintain a stable outlook, reflects a more positive perception of the Central American country’s economy.
According to the release According to Moody’s, the upgrade to B3 is indicative of El Salvador’s “moderate economic strength,” as well as improved growth and investment expectations. This rating change is based on recent liability management, which has significantly reduced the country’s external amortizationsreducing repayment risk and alleviating liquidity pressures in the short and medium term.
Additionally, Moody’s highlights that the fiscal consolidation measures adopted by the Salvadoran government have improved debt sustainability, thereby strengthening the country’s overall credit profile. However, the agency also notes that, despite these advances, El Salvador faces challenges due to a debt repayment capacity that remains weak, which limits its fiscal strength.
The B3 rating also reflects an improvement in the security situation and a notable improvement in government liquidity, making the country less vulnerable to adverse events. Although the ability to formulate consistent economic policies has been strengthened with the appointment of technocrats to key positions, which has increased investor confidence.
The stable outlook accompanying this rating balances positive developments, such as reduced annual financing needs, access to international capital markets, and improved investment and growth prospects, with persistent credit challenges. such as low debt affordability and limited fiscal space.
This rating upgrade comes six months after Moody’s upgraded El Salvador’s credit status Bitcoin-nayibbukele/” target=”_blank” rel=”noreferrer noopener”>from Caa3 to Caa1which left behind the questioning of that agency, which questioned the legal adoption of bitcoin (BTC) and stated that this policy could take the country into a risk zone, since the situation reflected “a growing possibility of non-compliance” with the payment of the debt, as reported by CriptoNoticias.
This article was created using artificial intelligence and edited by a human Editor.
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