Moody's ups Panama's country ceilings to A3

Moody's Investor Services said it has boosted Panama's foreign- and local-currency country ceilings for bonds to A3 from Baa1.

"Panama's country ceilings for bonds are meant to capture the risk of a disruption in the smooth functioning of the dollar payments system, as occurred during the 1988-89 political crisis," Moody's vice president and senior analyst Alessandra Alecci said in an agency rating. The United States had suspended the clearing arrangement between Panama and the U.S. Federal Reserve, and the Panamanian authorities imposed a nine-week bank holiday.

The upgrade also reflects the decreased risk of economic and political instability, which Moody's said was marginal but real. The agency said pointing to stability were the responsible running of the Panama Canal, since the handover in 1999, the relatively smooth government affairs.

The rating action does not affect Panama's Ba1 government bond ratings or the foreign- and local-currency onshore- and offshore-bank deposit ceilings.

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