S&P Global Ratings on Dec. 11 lowered its long-term foreign-currency sovereign credit rating on Colombia to BBB- from BBB, with a stable outlook, saying weaker-than-expected growth in 2017 and reliance on one-off revenues showed the challenges the government faces to gradually reduce its deficits.
S&P also cut Colombia's long-term local-currency sovereign credit rating to BBB from BBB+, with a stable outlook, and lowered the short-term foreign-currency rating to A-3 from A-2 and the transfer and convertibility assessment to BBB+ from A-. The short-term local-currency rating of A-2 was affirmed.
The Colombian economy continues to suffer from knock-on effects of lower commodity prices, reflected in high external debt and pronounced volatility in the country's terms of trade, and its weaker external position highlights less resilience to terms of trade and other external shocks, the agency said. It added that it still expected a gradual reduction in fiscal deficits and a marginal increase in debt in the coming three years.
Colombia's general government change in debt should average 3.1% of GDP during 2017-2020, down from 5.9% during 2014-2015, S&P said.
The agency forecast general government debt, net of liquid assets and excluding international reserves, to rise to 38% of GDP in 2020 from 35% of GDP in 2017. GDP growth should come in at 1.6% during 2017, before picking up to 2.5% during 2018 to 2019.
The higher local-currency rating on the country was due to the credibility of its monetary policy, its floating exchange rate regime and the depth of its capital markets, S&P added.
Colombia's long-term local-currency issuer rating was lowered to BBB from BBB (high), and its short-term local-currency issuer rating was downgraded to R-2 (high) from R-1 (low) by DBRS on Nov. 28.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
