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Fitch downgrades Costa Rica; Chile cuts benchmark rate

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Fitch downgrades Costa Rica; Chile cuts benchmark rate

* Fitch Ratings downgraded Costa Rica's long-term foreign and local currency issuer default ratings to BB from BB+, while revising the outlook to stable from negative. The rating agency pointed to the country's "deteriorating debt dynamics," noting that the central government's fiscal deficits grew to some 5.7% of GDP in 2015. While the country saw some improvement in 2016, the deficit is still expected to rise further in the coming years due to higher interest rates and spending, Fitch said.

* Banco Central de Chile lowered its benchmark interest rate by 25 basis points to 3.25%. "If the recent trends of the economic scenario persist, and so do their implications on the medium-term inflation outlook, it will be necessary to boost the monetary impulse," the central bank said in a statement.

MEXICO AND CENTRAL AMERICA

* Shinkin Central Bank has signed an agreement with Banco Mercantil del Norte SA Institución de Banca Múltiple to provide financial support for Japanese shinkin banks' customers in Mexico, The Nikkei reported. Under the arrangement, shinkin bank customers introduced to the Mexican bank through Shinkin Central Bank would be able to borrow money from Banco Mercantil.

* Jaime Reusche, a Moody's analyst for Mexico, said there is currently an equal probability of the rating agency downgrading Mexico as there is of the country reverting its negative outlook, the Financial Times reported. "It depends on what happens … and how effective Mexico's response is," the analyst said during a conference call.

* Banco Nacional de México SA Integrante del Grupo Financiero Banamex cut its 2017 GDP growth forecast for Mexico to 1.2% from 1.8% previously, citing uncertainty and risks related to the trade policies of Donald Trump, who will be inaugurated as U.S. president Jan. 20, El Economista reported.

* BBVA Bancomer SA Institución de Banca Múltiple Grupo Financiero BBVA Bancomer will not close any of its branches in Mexico even though its Spanish parent company continues to shutter branches in order to reduce costs, El Economista reported, citing Hugo Nájera Alva, the bank's business development head. BBVA Bancomer currently has more than 1,800 branches in Mexico.

CARIBBEAN

* Alawwal Bank said it received local regulatory approval to set up a fully owned subsidiary in the Cayman Islands. The company will trade derivatives and take part in repo activities, and its establishment will not affect Alawwal Bank's current financial statements.

BRAZIL

* Banco Alfa de Investimento SA said its board approved interest on equity payments equal to about 6.05 centavos per common share and 24.71 centavos per preferred share tied to the bank's second-half 2016 results.

* Inflation in Brazil, as measured by the IPCA-15 index, increased 5.94% in the 12 months to mid-January, decelerating from a rise of 6.58% in mid-December 2016, Reuters reported, citing government statistics bureau IBGE.

* S&P Global Ratings revised its outlook on Haitong Banco de Investimento do Brasil SA's global and national scale ratings to stable from positive, while lowering the bank's long-term national scale rating to brA from brA+. The outlook revision on the lender reflects the same action on Portugal-based parent company Haitong Bank SA, which was a result of the difficulties ahead for the Portuguese banking sector.

* Teori Zavascki, the Brazilian Supreme Court justice who was presiding over the largest corruption probe in the country's history, died in a plane crash Jan. 19, Reuters reported.

* Brazil's government is negotiating a fiscal recovery plan with the state of Rio de Janeiro under which the state may receive a three-year grace period for debts owed to both banks and the federal government, Valor Econômico reported. Also as part of the deal, the cash-strapped state could get 8.5 billion reais in new bank loans.

SOUTHERN CONE

* Argentina's government has transferred responsibility for compiling the country's balance of payments statistics to Banco Central de la República Argentina from national statistics agency INDEC's office of international accounts. Argentina's recent decision to eliminate exchange rate controls and move to a floating exchange rate system means the balance of payments depends "essentially on the monetary policy of the central bank," the government said.

* Javier González Fraga, the new head of state-owned Banco de la Nación Argentina, said he plans to focus his management efforts on mortgage lending and loans to SMEs in the productive sector, El Cronista reported. The executive does not plan to make any changes to the bank's board or its management team. "I am convinced the bank is on the right course," he said.

* Argentina received more than $21 billion of orders for a $7 billion two-part bond offering the country launched on Jan. 19, IFR reported. The offering consists of a $3.75 billion 10-year bond and a $3.25 billion five-year note.

* Argentine Foreign Minister Susana Malcorra said the government could pursue a bilateral trade agreement with the U.K. after the country exits the European Union, El Cronista reported. However, Brexit will not impact Argentina's relationship with Europe, she said in an interview with a Spanish newspaper.

* Chile's Senate approved a presidential proposal to appoint economist Rosanna Costa as a director at Banco Central de Chile for the next three years, Diario Financiero reported. The approval was almost unanimous.

IN OTHER PARTS OF THE WORLD

* Asia-Pacific: Indonesia holds benchmark rate; Lloyd's India branch gets regulatory nod

* Middle East & Africa: More banks report Q4'16 results; Saudi Arabia cash crunch over?

* Europe: Deutsche faces $3B Jewish trust lawsuit; Sberbank headcount could halve by 2025

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

The Daily Dose has an editorial deadline of 8 a.m. São Paulo time, and scans news sources published in English, Portuguese and Spanish. Some external links may require a subscription.