A representative spoke of debt problems for the main Latin American economies and highlighted the rise in US Treasury bond rates.
At the Council of the Americas’ annual “Bravo” event, Todd Martínez, senior director in the sovereign group of Fitch Rating classified 2024 as a year “complicated” for the region’s debt market.
In Chile and Colombia, Fitch sees a low probability of their governments causing changes in their countries’ sovereign ratings. While for Brazil, Argentine partner, foresees that the government of Lula Silva will continue to benefit from strong domestic demand despite the economic slowdown.
“We see positive aspects in the microeconomic agenda of Lula on some fronts,” added the analyst.
For Fitch, the electoral result may compromise the duration of the official economic policy
For his part, the analyst indicated that the rise in interest rates US Treasury bonds They affect emerging countries because they will have to pay a higher cost to emit and described it as one of the challenges facing the entire world. In turn, he indicated that deficits are increasing “almost everywhere” – as reported by Bloomberg Línea – and that includes Mexico, Brazil and Chile.
“Going into next year, countries will be in a position where they will probably have to borrow more and at somewhat more expensive rates. I think this will put more emphasis on countries perhaps relying more on their domestic markets, where rates we expect decrease in most places,” he said.
What Fitch Ratings said for Argentina
Prior to the presidential election that defined Sergio Massa and Javier Milei as the candidates to compete in the runoff, Fitch Ratings indicated that whoever the President is, there is a risk of “default or restructuring”. It is worth remembering that Argentina has a liability of more than US$40,000 million with the International Monetary Fund (IMF) and without access to the capital market, registering the “CC” rating from Fitch.
Source: Ambito
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