US investment bank JP Morgan downgraded its recommendation on Panama bonds after US President Donald Trump stepped up his threat this week to “take back” the Panama Canal.
While the two countries could end up resolving the issue, “the potential noise associated with the path that could take us there should make markets increasingly sensitive to key risks,” the analysts warned.
Combined with “little clarity on the end” for Trump, they downgraded Panama bonds to “market weight” from “overweight,” effectively a signal for exposed investors to scale back.
Others have also warned that Trump’s threat could have serious consequences for Panama. Research firm Tellimer has highlighted that canal-related transfers are the country’s main source of income, contributing just over 13% of general government revenue.
