Moody's reaffirms Peru's A3 credit rating in local and foreign currency

02:08 | Lima, Jul 1.

The Ministry of Economy and Finance has indicated that Moody's Investors Service —in its annual review— reaffirmed Peru's credit rating at A3 for its long-term debt in local and foreign currency, with a stable outlook.

In this regard, Moody's stated that despite the negative but temporary impact of the coronavirus pandemic on Peruvian economy this year —which will lead to a record increase in the fiscal deficit— the economy is expected to grow by 8% in 2021.

In this sense, it highlighted the significant financial recovery capacity compared to other emerging economies and the absence of significant macroeconomic imbalances.

"Solid economic fundamentals, an absence of major macroeconomic imbalances and strong economic institutions have provided a strong and stable environment that supports its investment-driven economy," Moody's underlined.

The credit rating agency stated that Peru's key credit strengths are (a) moderate and affordable government debt, (b) moderate fiscal savings, (c) the government's strong balance sheet, and (d) solid fiscal policy credibility.

Thus, to grant the A3 rating, Moody's uses a methodology that quantifies quantitative and qualitative variables that are summarized in 4 main factors: (1) economic strength, (2) institutions and governance strength, (3) fiscal strength, and (4) susceptibility to event risk.

"These have been extreme circumstances for economies around the world. However, we are one of the few countries in the region that rely on the necessary solvency to face this crisis, and this is recognized in this reaffirmation of the credit rating," the Cabinet member added.

Furthermore, according to Moody's, global investors in the bond market recognize Peru's fiscal soundness, which supports the favorable opinion on the South American country's economy.


Published: 7/1/2020
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