Colombia Ratings on High Grade Path

S&P has changed the outlook on Colombia’s BB+ foreign currency rating to positive from stable, increasing the likelihood of the country making investment grade. “We believe an upgrade is likely if the next administration, led by president-elect Juan Manuel Santos, pursues policies that strengthen the growing resilience of the economy, including reducing its vulnerability to external shocks,” the agency says. Constraints on the rating include the country’s still-low, albeit improving, economic prosperity, limited size of domestic financial markets, and continuing security challenges, says S&P. Other rating agencies also have Colombia at a notch below investment grade. Moody’s assigns a Ba1 rating on the sovereign and Fitch BB+. “The good news is that newly elected president Juan Manuel Santos has been well received by the markets,” says local brokerage firm Corredores Asociados. “It is possible that within 6 months the ratings agencies could upgrade Colombia to investment grade,” it adds.