1705992350
Risk assessment agency S&P reported that after changing Colombia’s credit outlook from stable to negative The company also lowered scrutiny for three commercial banks and two state-owned banks.
“We have revised the outlook of five Colombian banks from stable to negative “We confirm the banks’ long- and short-term credit rating of ‘BB+/B’ for the issuers.”confirmed the risk assessment agency in its official statement.
This is Bancolombia; Bank of Bogota; Davivienda; Financial Territorial Development, Findeter; and National Development Finance, FDN. As already mentioned, this would be a consequence of Colombia’s changing perspective, since the ratings of institutions are no higher than the ratings of states as they explained.
In the case of Bancolombia SA, the measure also includes its subsidiaries, which include the bank’s core in Panama, the subsidiaries Banistmo SA and Bancolombia Panamá SA
Andrés Moreno, financial advisor, explained: “With the lowered outlook, all companies that have bonds on the market are adapting to this rating.” For this reason, it is seen as a domino effect and companies such as Ecopetrol and its subsidiary ISA were also affected.
Diego Palencia, vice president of research and strategy at Solidus Capital, explained that the banking sector is in a period of great stress “due to the strategic downturn proposed by the government as well as political risks that cannot be diversified.” He stressed that Colombia’s rating was downgraded months ago under Iván Duque’s government. Due to pandemic debt, the outlook initially remained neutral and has now turned negative.
Nevertheless, S&P clarified that “in our view, the Colombian banking sector has characteristics that still support an economic risk assessment.” stronger than its competitors in the region with an economic risk level of “8”, such as Costa Rica, Honduras, Jamaica and Paraguay. “The Colombian economy, for example, has greater diversification and a higher GDP per capita than its peers, which translates into a more resilient economy,” the ratings agency explained.
LR diagram
“In addition, the Colombian banking sector’s loan portfolio is well diversified (in terms of economic sectors, business lines and customers), has low exposure to foreign currency loans and takes a conservative approach to consumer and mortgage loans,” S&P added.
Finally, S&P emphasized that Colombia’s rating indicates the “risk of possible structural change”. Furthermore, he emphasized this If a scenario with economic growth below 3% (trend rate) occurs and there are no corrective measures, it may lead to “fiscal misses or major external vulnerabilities.” For this reason, there is a risk of a rating downgrade in the next two years.
#Colombias #downgrade #revised #ratings #banks #negative