Paraguay on Negative Watch: S&P

S&P has placed Paraguay’s BB minus rating on CreditWatch negative, it says, following the impeachment of President Fernando Lugo last week. The move “reflects the rising credit risks due to the possible political and economic ramifications of the abrupt change in government, and the exit of key economic officials in the government – specifically Finance Minister Dionisio Borda and Jorge Corvalan, president of the central bank,” the agency says. In addition, Paraguay’s main trading partners, Argentina and Brazil, have threatened economic sanctions that, if put in place, would damage economic prospects and lead to worsening fiscal and external indicators. S&P expects to make a judgment on the rating within 3 months.