Fitch: Peru paves way for continued growth

09:19 | New York (U.S.), Dec. 5.

The announcement of recent projects —such as Anglo American plc's US$5.3 billion copper project in Peru and the completion of financing for Minsur's US$1.6 billion Mina Justa copper project— paves the way for continued growth, Fitch Ratings has affirmed.

"In Peru, metal prices bolster liquidity," it stressed.

According to the credit rating agency, if the country passes laws in the next six months allowing for the mining of lithium and uranium deposits, it should support continued growth in the sector.

On the other hand, corporate credit indicators reveal that countries across Latin America are facing varying levels of economic and political development to which corporates must adjust, according to a new Fitch Ratings report.

"There are a variety of trends at play, from new governments, to potential changes in regulation, to uneven economic performance," said Fitch Director Jay Djemal. 

"The results in corporates are equally as diverse," he added. 

In Argentina, leverage is on the rise. Argentine peso depreciation is taking a toll, as international debt amounts increased in local currency terms, compared with issue dates.

Furthermore, hyperinflation is pressuring prices, which not all companies can manage swiftly, despite vast local experience. The ability to reduce leverage in 2019 will depend heavily on the country's macroeconomic condition.

In Brazil, leverage is in a soft decline. Anticipated moderate cash flow improvements should not lead to material deleveraging in 2019. The effects of currency fluctuations on debt volumes should limit a major decline in leverage in the short term.

Weak domestic currencies and poor performance in the Latin American region will prevent further improvements. There is not much room left to improve cash flows through cost reduction plans, due to the extensive efforts already implemented over the last few years. 

Editor's note: Information provided by Fitch Ratings.


Published: 12/5/2018
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