Moody’s cuts Costa Rican banks

Moody's Investors Service said it downgraded the long-term local currency deposit and foreign currency senior unsecured debt ratings of Banco Nacional de Costa Rica (BNCR) and Banco de Costa Rica SA (BCR) to Ba2 from Ba1, with a negative outlook.

At the same time, the agency downgraded the banks' long-term foreign currency deposit ratings to Ba3 from Ba2, also with a negative outlook.

The action follows Moody's Feb. 9 downgrade of Costa Rica's government bond rating to Ba2 from Ba1, with the negative outlook maintained.

The banks’ ba2 baseline credit assessments and adjusted BCAs are unaffected, as are their Ba1(cr) and Not Prime(cr) long- and short-term counterparty risk assessments.

The key driver behind the downgrade in the sovereign rating is the continued weakening of Costa Rica's fiscal profile, reflected in its rising government debt burden and persistently high fiscal deficit, which was 5.2% of GDP in 2016, the agency explained.

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