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The firm Fitch Ratings assigned a “B” rating to the bonds issued by Bolivia, for 850 million dollars, maturing on March 2, 2030. In this regard, an economist pointed out that this means that the country is seen as more risky and weak.
“Fitch Ratings assigned a B rating to Bolivia’s $850 million bonds due March 2, 2030. The notes have a 7.5% coupon. The proceeds from this issue are being used for general budget purposes and a concurrent liability management operation that involves the repurchase of existing bonds”, states the report published by the rating agency.
Specifies that the bond ratings are in line with Bolivia’s long-term foreign currency Issuer Default Rating (IDR).
You can also read: Of 2,000 million available, Bolivia places bonds for $850 million
However, the factors that could, individually or collectively, lead to a negative rating action or downgrade, is that the bond’s rating would be sensitive to any negative changes in Bolivia’s long-term foreign currency IDR, the report explains. of the rater.
Economist Jaime Dunn explained that the current B rating is lower than the double B (BB) that the country had when it issued its bonds years ago, which means that there was a deterioration in Bolivia’s credit rating, which began in 2016. and since then it has been adjusted until it reaches B.
“In the double BB and B ratings, both are weak ratings with a high speculative degree and obviously the B is more speculative than the double B, with this rating we are at the levels of Nigeria, an African country. This means that Bolivia is classified as a riskier country than before and since it is riskier for investors to come to this country, they must be offered higher returns,” said the analyst.
You can also read: Fitch Ratings maintains Bolivia’s “stable” rating, but warns of pressure on the RINs
He said that since it is more complicated for investors to set their sights on Bolivia, they have to be offered higher interest rates such as the 7.5%, when those bonds were previously offered at an average rate of 5%, so Therefore, for the country, borrowing is more complex and more expensive.
On Wednesday, February 23 of this year, the Government affirmed that it managed to place 850 million dollars of sovereign bonds on the international financial market with an interest rate of 7.5%, which is the highest in recent years.
The value represents 42.5% of the offer that was launched on February 10 for the exchange and purchase of these securities, for an amount of 2,000 million dollars.
In October 2021, the rating firm Fitch Ratings maintained the B rating with a “stable” outlook for Bolivia, although it warned of government pressure on the Net International Reserves (RIN).
