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.
yahoo.com
'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.
yahoo.com
No comments:
Post a Comment