S&P puts El Salvador on watch

S&P said it placed the B+ long-term and B short-term foreign- and local-currency sovereign credit ratings on El Salvador on CreditWatch with negative implications.

The AAA transfer and convertibility assessment is unchanged.

The ratings were placed on CreditWatch negative based on a view of deteriorating financial management, reflected in a weakening of the government's ability to gain access to liquidity, S&P said.

This is due to heightened political polarization, the agency said.

The Administration of President Sanchez Ceren has been unable to get Congressional approval for its external debt issuance plans, which requires a two-thirds majority in Congress, S&P explained.

As a result, it has accumulated about $1 billion in short-term locally issued debt, the agency said.

Failure to agree on fiscal and other reforms that help stabilize the government's access to liquidity contain the recent growth in its debt burden could lead to a downgrade, S&P said.

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