Sovereign credit ratings in Latin America and the Caribbean: Trends and impact on debt spreads
- Author(s):
-
Bustillo, Inés |
-
Perrotti, Daniel E. |
- Velloso, Helvia
- Date Issued:
- 2018-12-17
- Serie:
- Studies and Perspectives Series (Washington, DC)
- No.
- 178
- UN symbol:
Due to historically low internal saving rates, access to external financing is very important to Latin America and the Caribbean (LAC), even more so in the context of the 2030 Agenda and the implementation of the Sustainable Development Goals (SDGs). Public financing falls short of what is needed for this task and must be complemented with private flows, which in fact make up the bulk of the region’s external financing. The credit quality of the sovereigns in the region has an important role in determining how costly the access to private external financing can be.
This report examines the history of sovereign credit ratings in Latin America and the Caribbean, the evolution of credit quality, and the relationship between credit rating changes and the cost of accessing external financing reflected in the behavior of sovereign debt spreads.
Abstract .-- I. Evolution of sovereign credit ratings .-- II. Impact of credit rating changes on debt spreads .-- III. Final thoughts.
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Introducción
During the 1990s the market for Latin America's debt grew in volume, types of instruments traded and number of investors and trade houses involved. Investors were drawn by high growthpotential and high yields in most Latin American countries, as well as by a general trend towards the i...