News Column

Fitch: Limited Rating Actions Expected Despite Challenging Conditions in Argentina and Venezuela

June 25, 2014



CHICAGO--(BUSINESS WIRE)-- Latin America corporates that have significant operations in Argentina and Venezuela are well positioned to withstand the turbulent environment, according to a new Fitch Ratings report.

'Market conditions will continue to be challenging in Argentina and Venezuela during 2014 due to high capital controls and inflation' said Joe Bormann, a Managing Director at Fitch Ratings. 'Looking at Fitch's portfolio, however, corporates with operations in those countries will experience limited spillover upon their ratings as these risks have been incorporated in them.'

Economic conditions in both countries have been hurt by recent currency devaluations. Argentine GDP growth is now projected to shrink from 3.3% in 2013 to 1.5% in 2014, while the Venezuelan economy is expected to contract by more than 1% in 2014. The scarcity of imported goods in both countries remains a concern, especially Venezuela. Inflation is projected to be in excess of 50% in Venezuela and around 20% in Argentina.

Capital controls remain prevalent in both countries as they seek to stem the decline in international reserves. The risk that companies will be prohibited from transferring dollars abroad or converting pesos or bolivars into U.S. dollars or Euros to service debt remains high. In both Argentina and Venezuela it is difficult, if not impossible, for international companies to receive hard currency dividends.

The Argentine government is not likely to nationalize assets within the next year as it attempts to improve its access to international markets. In Venezuela, the government currently maintains a more aggressive approach toward subsidiaries of foreign companies.

For more information, a special report titled 'Stormy Corporate Outlook in Argentina and Venezuela' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Stormy Corporate Outlook in Argentina and Venezuela (Limited Spillover Effect Expected upon Ratings)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750097

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Joe Bormann, CFA, +1 312-368-3349

Managing Director

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

or

John Puerto Wiske, +1 212-908-9195

Analyst

or

Media Relations:

Elizabeth Fogerty, +1 212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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Source: Business Wire


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