The US-based Standard & Poor’s (S&P) credit rating agency has moved Paraguay’s credit rating up a notch, from BB to BB+, after holding it steady for the past 10 years, announced Carlos Fernández Valdovinos, Paraguay’s Economy Minister.
The move brings the S&P rating in line with the other two major international credit ratings agencies, who use a similar process but sometimes different labels, with Moody’s rating Paraguay as Ba1, and Fitch also applying BB+. All three ratings are equivalent levels, rating Paraguay’s credit as the safest level of “speculative”, just one level below “investment grade”.
S&P’s new grading reflects Paraguay’s continued economic growth, along with it’s stability and prospects over the coming months and years, but still “remain constrained by evolving institutions and a weaker monetary transmission mechanism than its peers,” S&P noted.
The administration of President Santiago Peña is promoting measures such as laws on pensions and civil service which could lead to improved gradings, Fernández Valdovinos also pointed out. The government now plans to sell a 12-year dollar bond and is considering a local currency issue abroad, joining Chile, Jamaica, and the Dominican Republic, which made similar sales last year.
With inflation slowing, Paraguay’s Central Bank (BCP) has cut interest rates by 200 basis points to 6.5%, with most analysts expecting a further cut of at least 100 basis points by the end of 2024.
