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Published on 4/23/2019 in the Prospect News Emerging Markets Daily.

Fitch lowers three Guatemala companies to negative

Fitch Ratings said it revised the outlooks on Cementos Progreso, SA (Cempro), Comcel Trust and Energuate Trust to negative from stable.

The outlook revision follows a similar recent outlook revision on Guatemala.

The outlook revision on the companies reflects heightened political tension and uncertainty, Fitch said, and steady erosion in the government's already low tax collection.

Presidential and congressional elections scheduled for this year may result in a government with a weak mandate, the agency said, and are likely to lead to a fractured congress.

The agency also affirmed Cempro's long-term foreign-currency issuer default rating at BB+, long-term local-currency issuer default rating at BB+ and BB+ rating on its $350 million senior unsecured notes.

Comcel Trust's long-term foreign-currency issuer default rating was affirmed at BB+ and long-term local-currency issuer default rating at BB+ and BB+ rating on its $800 million senior unsecured notes.

Energuate Trust's long-term foreign-currency issuer default rating was affirmed at BB, long-term local-currency issuer default rating at BB and BB rating on its senior unsecured notes rating.

The ratings on these companies are supported by a track record of macroeconomic stability and conservative policies, low public debt to GDP and sound external liquidity, Fitch said.

These strengths are counterbalanced by the country's narrow tax base that constrains policy flexibility and limits debt tolerance, the agency said, as well as weak governance, investment levels and human development indicators.


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