Fitch: Peru corporate issuers rated in BBB to BB categories

09:20 | New York (U.S.), Jun. 11.

Corporate issuers in Peru are rated mainly in the 'BBB' to 'BB' categories, as most credit profiles reflect steady cash flow generation, adequate liquidity and moderate to low leverage, Fitch Ratings has affirmed.

According to the credit rating agency, Peruvian corporate issuers maintained median net leverage in the 2.0x to 3.0x range in 2017-2018.

"Peru remains an outperformer in the Latin America region. Fitch expects the nation to sustain an average annual growth rate around 3.7% in 2019-2020, significantly higher than the regional average of 2.8%," it pointed out.

For their part, Latin American corporate credit indicators point toward a return to low economic growth across most of the region, decelerating the expected improvement in credit profile for corporate issuers, according to a series of new Fitch Ratings reports.

"Escalating global trade tensions and policy uncertainty have taken the wind out of the sails for economic growth expectations across most of Latin America during the first quarter of 2019," said Jay Djemal, Senior Director.

"Modest economic growth in Chile and Colombia, increased risks from different fronts in Mexico, upcoming elections in Argentina, and difficulties enacting pension reforms in Brazil applied the brakes to the expected improvement in corporate credit profiles. Peruvian corporate issuers are the outperformers of the region, reflecting the country's higher GDP growth rates," he added.

Leverage is on the rise for corporate issuers in Argentina due to hyperinflation in the economy negatively impacting companies' results and the plummeting Argentine peso further pressuring issuers with mainly U.S. dollar-denominated debt. Upcoming presidential elections in October present uncertainty to investors as reforms could be disrupted if an opposition candidate wins.

Editor's note: Based on information provided by Fitch Ratings.


Published: 6/11/2019
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