Credit Stress Looms In Latin America, Says Report
This report does not constitute a rating action.
PARIS (S&P Global Ratings) March 23, 2023--Surging financing costs are likely to cause significant credit stress for Latin American corporates by the end of 2024, said S&P Global ratings. Credit deterioration will be felt across the board, including by governments and households, and could be especially acute in Chile and Colombia, says the report "Credit Stress Looms In Latin America As Financing Costs Surge" published today.
Key Takeaways
- Our analysis shows that nonfinancial entities in Latin American countries are enduring the most severe tightening of financial conditions seen in recent history, raising concerns about default rates and banks' asset quality.
- We expect credit stress could surface quicker in Brazil. Corporate defaults may pick up in Brazil before other countries because of the significant share of floating -interest rate debt on corporate balance sheets and the rapidly rising interest burden stemming from it.
- Businesses, households, and governments are all facing the effects of unusually severe tightening in financing conditions. This is expected to result in a particularly strong credit deterioration in countries like Chile and Colombia that have previously enjoyed prolonged interest-rate stability.
The report is available to subscribers of RatingsDirect at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@spglobal.com. Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at www.standardandpoors.com. Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; or Stockholm (46) 8-440-5914
| Primary Credit Analyst: | Gregoire Rycx, Paris +33 1 4075 2573; gregoire.rycx@spglobal.com |
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