S&P Improves Panama Debt Rating From BBB- to BBB
Tuesday, July 03 2012 @ 12:51 PM EDT
Contributed by: Don Winner
Editor's Comment: S&P has a total of twelve steps on their ratings scale, ranging from D (worst) to AAA (best). In 2010 all three of the major houses increased Panama's rating to "investment grade" for the first time. In the case of S&P their "BBB-" (level five of twelve steps) is considered to be the first or lowest of the investment grade ratings. This further increase or improvement to a rating of BBB (level four of twelve steps) is a strong independent endorsement of the way the government of Ricardo Martinelli is handling Panama's economy and debt, despite all of the shrill noise being made internally by the members of the political opposition parties. The simple fact of the matter is that under the administration of Ricardo Martinelli Panamanian debt was ranked as "investment grade" for the first time in history, a situation which has improved even further with this additional increase. I now expect the other ratings houses - Fitch and Moody's - will also probably increase Panama's ranking sooner rather than later. Here is an explanation of all of S&P's ratings levels;
- ‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
- ‘AA’—Very strong capacity to meet financial commitments.
- ‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
- ‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
- ‘BBB-‘—Considered lowest investment grade by market participants.
- ‘BB+’—Considered highest speculative grade by market participants.
- ‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
- ‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
- ‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
- ‘CC’—Currently highly vulnerable.
- ‘C’—Currently highly vulnerable obligations and other defined circumstances.
- ‘D’—Payment default on financial commitments.