Fitch revises ICE to negative

Fitch Ratings said it affirmed Instituto Costarricense de Electricidad y Subsidarias' (ICE) long-term foreign and local currency issuer default rating at BB and revised the outlook to negative from stable.

Fitch said the sovereign outlook revision reflects Costa Rica's diminished flexibility to finance its rising budget deficits and public debt burden, as well as persistent institutional gridlock preventing progress on reforms to correct the fiscal imbalance.

“Incipient signs of crowding out of private investment have increased risks to Fitch's prior expectations that the economy will remain insulated from fiscal stress, while the sovereign's reliance on the local capital market to meet its high financing needs is facing greater strain,” the agency said in a news release.

“Uncertain prospects for fiscal reform imply continued large deficits and a rapidly rising debt burden.”

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