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Fitch: Paraguay, only one step away from reaching Investment grade

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The Fitch Investment Grading company improved Paraguay’s credit rating so it is now positioned only one category below investment grade. For financial analysts, this consolidates Paraguay’s international image in the investor world.

The new rating of Fitch ratings, which was announced yesterday, is Paraguay in “BB +”. In 2017, Moody’s already ranked our country in the same category as its scale, while following two of the investment grades in the latest Standard & Poor’s report.

And while Paraguay still continues with a degree of speculation, the new qualification helps to improve the country’s image abroad, says financial analyst Amilcar Fernandez.

“This kind of news has a strong impact on the investor world and means more investors will look at Paraguay as an interesting investment opportunity,”

To improve the qualification, Fitch ratings considered Paraguay’s economic growth, which is in the order of 4% annually against an average of just over 2% at the regional level. Also, how they controlled inflation, which in 2018 was just 3.5%.

Paraguay also remained stable in the face of the inflation rate in the region and the economy was barely affected by the trade war between the US and the United States. The U.S. and China can be read in the qualifier report.

Likewise, it indicates that it influenced by the diversification within the Paraguayan economy, which gradually leaves its dependency on Agriculture, with an increase in industries.

Fitch, Moody’s and S & P are the biggest qualifiers in the world. They measure, among other aspects, the capacity of a government or entity to pay off their credit commitments and the risk involved in investing in these debts, as in the case of the sovereign bonds that Paraguay places on the international market.

And even though Paraguay remains speculative, also known as having “junk bonds,” economist Manuel Ferreira clarified that Paraguay is in a privileged position because it quotes sovereign bonds at an interest rate very close to the true market values.

He explained that with the rising to another category, there will also be many other aspects of the economy that will also benefit. He cited, for example, the reduction of interest rates in the local market for credit, the increase in the values of real estate and corporate assets, the expansion and the larger scale of commercial operations.

Source: ABC

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