The rating agency lowered the rating of Ecopetrol, Grupo Sura, Isagen, Ocensa and Davienda, as well as that of Financiera de Desarrollo Nacional and Findeter.
On Wednesday May 20, Standard & Poor’s (S&P) lowered Colombia’s risk rating for long-term debt in foreign currency from BBB- with a negative outlook to BB + with a stable outlook. In other words, the country lost the investment grade it had had since 2011.
Also read: Colombia lost investment grade on the Standard & Poor’s scale
Following the decision, the rating agency announced on Thursday that it also lowered the ratings of five companies and two Colombian entities. These are Ecopetrol, Grupo Sura, Isagen, Ocensa and Davivienda, as well as that of Financiera de Desarrollo Nacional (FND) and Findeter.
In all cases, the long-term rating went from BBB- to BB + with a stable outlook, that is, like Colombia, these organizations lose their investment grade.
In addition, the short-term ratings of Banco Davivienda and Findeter went from A-3 to B.
The rating agency also lowered the ratings of Enel and Emgesa from BBB to BBB-, however, both entities had a higher rating than Colombia. So they maintain the investment grade.
“The rating of both entities is higher than that of the sovereign, mainly due to the potential support they would receive in the event of financial difficulties from their parents,” explained the rating agency.
Likewise, S&P also confirmed the AA rating of Sociedad Concesionaria Vial Montes de María (Puerta de Hierro) and the outlook remains stable.
It may interest you: Colombia would take at least two years to regain investment grade
Standard & Poor’s explained that the downgrade of the Financiera de Desarrollo Nacional (FND) and Findeter, the two state-owned banks, reflects their economic roles and very important ties with the government. And with respect to Davivienda, it indicates that the sovereign’s ratings limit those of the bank given its great exposure to country risk and the highly sensitive nature of its businesses to sovereign stress.
However, it clarified that the rating actions do not reflect a deterioration in the individual credit profiles (SACP, for its acronym in English for stand-alone credit profiles ) of the entities.
Also read: For investors, has Colombia already lost investment grade?
Follow the news of El Espectador on Google NewsStandard & Poor’s clarifies that the downgrades occur after the government withdrew from a fiscal reform project amid high spending pressures, “which results in a significantly lower probability that Colombia will improve its fiscal position after a recent and marked deterioration ”.
