After downgrade, Panama talking with credit agencies about sovereign ratings

Senior officials in Panama have been talking to credit agencies about the nation's sovereign bond ratings, the country's deputy economy minister said on Monday. Last week, the Central American country's government rebuked Fitch Ratings after it cut Panama's sovereign bonds to speculative grade, or junk status, ahead of general election in May.

Senior officials in Panama have been talking to credit agencies about the nation's sovereign bond ratings, the country's deputy economy minister said on Monday.

Last week, the Central American country's government rebuked Fitch Ratings after it cut Panama's sovereign bonds to speculative grade, or junk status, ahead of general election in May. "We've been having conversations with the ratings agencies," said Deputy Economy Minister Carlos Gonzalez in a statement.

He noted that Panama's government has been meeting its fiscal targets, including a reduced budget deficit, but described credit agency opinions issued during the election season as imprudent. Panama is at risk of losing the coveted investment grade following concerns over its fiscal and governance challenges that have been aggravated by the closure of the country's largest mine.

The lower credit rating negatively impacts the country's borrowing costs when two of the three major credit rating agencies determine, via rating downgrades, that Panama's ability to pay back debt has significantly weakened.