22:37 | New York (U.S.), Jun. 25.
Moody's Investors Service has affirmed the Government of Peru's long-term foreign-currency and local-currency issuer ratings at A3.
"Concurrently, the Government of Peru's foreign-currency and local-currency senior unsecured ratings have been affirmed at A3, and its foreign currency senior unsecured shelf programs were also affirmed at (P) A3. The
outlook remains stable," the credit rating agency said.
The affirmation of Peru's A3 ratings balances the following key rating drivers:
The stable outlook on the rating reflects Moody's view that upside and downside risks to Peru's credit profile remain balanced.
Economic growth will continue to by supportive of creditworthiness, perhaps enhanced somewhat by planned micro-economic reforms, fiscal performance will remain sound and debt ratios will remain relatively stable, even as institutional strength challenges that hinder the efficient allocation of resources in the economy remain.
Peru's long-term and short-term foreign-currency bond and deposit ceilings remain unchanged at A1/P-1 and A3/P-2, respectively. The local-currency bond and deposit ceilings remain unchanged at A1.
Ratings rationale
Peru's moderate economic strength reflects benign growth dynamics and favorable medium-term economic prospects, counterbalanced by relatively low national income levels. The country's investment-fueled growth model over the past decade has produced average annual growth of 4.4% in 2009-18, facilitated by Peru's stable and predictable macroeconomic environment.
Despite multiple recent adverse shocks including the commodity price shock of 2014-16, the
Coastal El Niño floods from 2017 and the ongoing various corruptions scandals since 2017, the economy's demonstrated resilience has supported Moody's assessment of the country's economic strength.
Peru's average real GDP growth rate between 2014-18 of 3.2% is in line with the 'A'-rated median of 3.4%.
The strong recovery in domestic demand that began in 2018 has helped the economy resume progress on various social and development indicators, such as
reducing poverty and absorbing a larger amount of new entrants and existing workers into the formal economy given Peru's favorable demographic profile.
Also supporting these favorable medium-term prospects are the planned microeconomic reforms tied to the national competitiveness and productivity plan, which —if implemented— could
increase potential growth above 4%.
Editor's note: Based on information provided by Moody's.
(END) NDP/MVB
Published: 6/25/2019