S&P lowers El Salvador

S&P said it lowered its long-term foreign and local currency sovereign credit ratings on El Salvador to B- from B and removed the ratings from CreditWatch with negative implications.

The outlook is negative.

The agency also affirmed its B short-term sovereign credit ratings and removed them from CreditWatch negative. The AAA transfer and convertibility assessment is unchanged.

S&P said the downgrade reflects a continued erosion of El Salvador's fiscal and debt profiles and raising concerns about its access to adequate liquidity to meet its funding requirements for 2017 and 2018.

Recent political agreements between the government and opposition parties could gradually improve the government's access to liquidity to meet its debt servicing needs, including payments due to the country's pension system.

The downgrade also reflects the country's weakening prospects for economic growth in a context of lower investor confidence and the need to undertake fiscal adjustment to stabilize the government's growing debt burden, S&P explained.

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