Moody's Changes Panama's Outlook To Negative, Affirms Baa1 Ratings

• Moody's Investors Service, has changed the outlook on the Government of Panama's ratings to negative from stable. Moody's has affirmed the long-term issuer and senior unsecured debt ratings at Baa1, and Panama's senior unsecured shelf ratings at Baa1.
• The key driver for the change in outlook to negative is the consideration that, absent meaningful fiscal consolidation and a sustained economic recovery, the sharp deterioration in fiscal and debt metrics will continue to undermine Panama's credit profile in the coming years.
• A continued rise in the government's debt and interest burdens would bring Panama's fiscal metrics in line with Baa peer medians, materially eroding a credit strength that supported the upgrade of Panama's ratings to Baa1 in 2019.
• The Baa1 rating incorporates the sovereign's still-present underlying credit strengths, including trend growth in excess of 4%, which has been above that reported by most Baa-rated peers. Additionally, Panama's ability to access market funding at relatively low borrowing costs keeps government liquidity and refinancing risks contained.

(Source: Moody’s Investors Service)