Moody’s Sees Risks in Credit Ratings for Latin American Companies in 2024
2024 will bring "relief" for Latin American companies, according to rating agency Moody's.
However, the firm highlighted that relief is expected this year. Meanwhile, Standard & Poor’s projected a better 2024 for Brazilian banking and considered it crucial to continue investing in technology and innovation.
2024 will bring “relief” for Latin American companies, according to rating agency Moody’s. However, the agency warned that “economic and social risks” persist in these economies, referring to “higher rates for longer, reforms and regulations, adaptation to structural changes, and polarization.”
Moody’s believes these factors will impact overall credit quality in 2024 and added that high financing costs “reduce both spending flexibility and margins, especially for over two-thirds of Latin American companies rated as speculative grade.”
In this context, countries like Mexico will face risks such as the impact of elections and China’s economic slowdown, as well as environmental issues and social tensions.
This could lead to a slowdown in growth for the year, following a surprisingly “solid” 2023, even though an increase in public spending is expected during election times.
In this scenario, Moody’s sees that Mexico’s automotive, real estate, and communication technology industries “will benefit the most from their integration into the supply chain of the rest of North America.”
For Brazil, however, a “decline in consumption and agricultural production (after a record 2023) will limit growth.”
Meanwhile, growth in Chile, Colombia, and Peru will recover “after a difficult 2023,” although it “will remain below historical trends.”
Argentina’s economy will contract for a second year, “as the government seeks to resolve fiscal and economic distortions that have been in place for two decades. After 2025, strong agricultural exports and shale gas production in Argentina will offer some relief.”
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