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S&P acts on El Salvador, affirms Banco Agrícola

S&P Global Ratings on Dec. 8 revised its banking industry risk assessment, or BICRA, on El Salvador to group 8 from 7 and revised its economic risk score to 9 from 8.

Additionally, S&P also lowered its ratings on El Salvador-based commercial bank Banco Agrícola SA to B-/C from B/B, with a negative outlook. The bank's ratings were also removed from CreditWatch negative where they were placed earlier in October.

The rating agency also revised the anchor for banks operating in the country to "bb-" from "bb", and maintained the country's industry risk score at 6.

The trend on El Salvador's related economic risk was revised to stable from negative, reflecting the country's economic resilience and "extremely high" credit risk.

S&P said that the weaker BICRA economic risk score reflects a continuing drop in the country's economic resilience.

The country's political deadlock prompted the rating agency to decreases in its economic growth assessment for 2017-2019.

The negative industry risk trend reflects S&P's opinion that if the country's political stalemate continues it will affect the government's ability to gain access to liquidity, thus worsening its credit stress.

Banco Agrícola's negative outlook reflects an at least one-in-three likelihood of a downgrade in the next 12 months if the sovereign credit stress drains the lender's liquidity.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.