Corporate credit indicators across Latin America point to a positive trend for the region, except for Brazil, Fitch Ratings said June 7.
Argentine corporates have improved their liquidity, which is helping to maintain their capital structures at relatively manageable levels. This may help those firms as they face a peso devaluation and higher interest rates.
In Peru, mining firms are also expected to continue improving their capital structures and liquidity, Fitch said.
Some Chilean firms are expected to strengthen their credit profiles, particularly commodity exporters and those in the mining, retail and food and beverage sectors.
Meanwhile, upcoming presidential elections in Colombia prompted firms to postpone investment and spending decisions in the first half of the year. In the post-election phase, the pace of investments in Colombia may stay low for a while.
Mexico is still in talks to rework the North American Free Trade Agreement, contributing to uncertainty, though this should not seriously affect U.S. trade ties, according to the rating agency.
Fitch's outlook for the region points to Brazil as the exception, as the country faces a highly volatile political environment, foreign exchange fluctuations, higher oil prices and a slowdown of economic recovery. These factors are contributing to higher uncertainty and will likely affect corporate cash flows over the next two or three quarters, Fitch said.
