Fitch: Latam Faces Weak Demand, US Interest Rate Increase

NEW YORK--()--Fitch Ratings says in a new report that external forces continue to pressure Latin America, but local risks are also on the rise.

"Growth remains sluggish in the region, which when added to shaky global demand, slower growth in China, a potential US interest rate increase, and sluggish commodity prices, increases credit risk," said Peter Shaw, Regional Credit Officer for Latin America.

Anemic domestic economies highlight the need for further reforms to bolster or build investor confidence. Colombia and Mexico remain bright spots, with the latter, in particular, poised to benefit from substantial reform momentum and renewed demand in the US.

Personal indebtedness is increasing against a backdrop of slowing wage increases and higher unemployment.

Corporate capex has seen little growth and revenues have slowed which, when combined with a difficult operating environment, led to a rising number of corporate downgrades during the last two years.

International markets are less likely to be receptive to lower-rated Latam borrowers. Higher refinancing needs in 2016-17, and depreciating currencies, raise the FX risk inherent in foreign currency borrowing though maturities of LATAM corporate international bond debt in 2015 remain light.

The report, "Latin America Risk Radar", is available at www.fitchratings.com.

Additional information is available on www.fitchratings.com.

Applicable Criteria and Related Research: Risk Radar Latam 4Q14

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=801568

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Peter Shaw, +1 212-908-0553 (New York)
Regional Credit Officer for Latin America
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Peter Shaw, +1 212-908-0553 (New York)
Regional Credit Officer for Latin America
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com