Informe de Standard & Poor´s

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La firma calificadora de riesgo Standard & Poor’s mantuvo la calificación de riesgo de la deuda de largo plazo de Costa Rica.

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Informe de Standard & Poor´s

  1. 1. February 13, 2012Research Update:Costa Rica Foreign-CurrencyRatings Affirmed; Long-TermLocal-Currency Rating Lowered DueTo Revised MethodologyPrimary Credit Analyst:Olga Kalinina, CFA, New York (1) 212-438-7350;olga_kalinina@standardandpoors.comSecondary Contact:Joydeep Mukherji, New York (1) 212-438-7351;joydeep_mukherji@standardandpoors.comTable Of ContentsOverviewRating ActionRationaleOutlookRelated Criteria And ResearchRatings Listwww.standardandpoors.com/ratingsdirect 1 937215 | 300000728
  2. 2. Research Update:Costa Rica Foreign-Currency Ratings Affirmed;Long-Term Local-Currency Rating LoweredDue To Revised MethodologyOverview• Robust economic growth and political stability continue to support the ratings on the Republic of Costa Rica, despite high fiscal deficits, rising (though still modest) debt burden, and a lack of consensus on passing long-awaited fiscal reforms.• We have affirmed the BB/B foreign-currency sovereign credit ratings on Costa Rica.• In addition, we have lowered the local-currency sovereign credit rating to BB/B from BB+/B based on our revised methodology, in which limited monetary flexibility--reflecting Costa Ricas managed exchange rate regime--prevents a differential between local- and foreign-currency ratings.• The stable outlook reflects our expectation that the government will implement timely measures to arrest fiscal deterioration.Rating ActionOn Feb. 13, 2012, Standard & Poors Ratings Services affirmed its BBlong-term and B short-term foreign-currency credit ratings on the Republicof Costa Rica. At the same time, Standard & Poors affirmed its B short-termlocal-currency rating on the sovereign and lowered the long-termlocal-currency sovereign credit rating to BB from BB+. The outlook isstable. The BBB- transfer and convertibility assessment and 2 recoveryrating on government bonds are unchanged.RationaleThe ratings on Costa Rica balance the countrys limited monetary flexibilityas well as rising fiscal pressures with good economic prospects, stablepolitical system, and relatively high level of social development. CostaRicas monetary rigidities reflect ongoing losses at the central bank (about0.6% of GDP in 2011) and a high (albeit declining) level of dollarization,which we estimate at more than one-third of the financial sectors claims anddeposits. Inflation targeting is complicated because of the managed exchangerate regime.On the fiscal side, Costa Rica has had a hard time containing spending, whichrose substantially during the past three years. Yet, the tax reform that thegovernment proposed in early 2011 to stabilize the fiscal accounts and affordStandard & Poors | RatingsDirect on the Global Credit Portal | February 13, 2012 2 937215 | 300000728
  3. 3. Research Update: Costa Rica Foreign-Currency Ratings Affirmed; Long-Term Local-Currency Rating Lowered Due To Revised Methodologymuch-needed infrastructure and security spending faces opposition and iscurrently stalled. As a result, we project that Costa Ricas fiscal deficits(including central government, central bank, and decentralized governmententities) will widen to 5.2% of GDP this year. (They were 4.7% of GDP in 2011and 5.5% of GDP in 2010.) This is the worst reported deficit in the region.The resulting increase in the net general government debt (to a projected 35%of GDP in 2012) is unlikely to reverse in the next few years. Under ourbaseline scenario, we expect fiscal reform, albeit a watered-down version,before year-end 2012. Because the next presidential elections are due at thebeginning of 2014, it will be difficult to introduce tax reforms in 2013.Supporting the ratings are Costa Ricas stable political system, strong publicinstitutions, rule of law, and general consensus on pro-growth market-orientedpolicies. A comparatively high level of human development contributes tosocial stability and supports Costa Ricas niche in skill-based exportservices. This, in turn, sustains solid long-term growth prospects, with realGDP growth per capita expected to average 2.2% between 2012-2014. Growinginternational reserves, which are boosted by large ongoing and projectedforeign direct investment, support external stability.We lowered the long-term local-currency rating to align it with theforeign-currency rating based upon our revised sovereign rating methodologypublished on June 30, 2011. Specifically, in sovereigns without a floatingexchange rate regime (Costa Rica has a de jure crawling band with anincreasing width exchange rate regime), Standard & Poors now aligns itslocal- and foreign-currency ratings.The recovery rating of 2 indicates our expectation of substantial (70%-90%)recovery in the event of a default. The BBB- transfer and convertibilityassessment, which is two notches higher than the BB long-termforeign-currency sovereign credit rating, reflects our opinion that thelikelihood of the sovereign restricting access to foreign exchange that CostaRica-based nonsovereign issuers need for debt service is moderately lower thanthe likelihood of the sovereign defaulting on its foreign-currencyobligations. The distinction is based on the outward orientation of the CostaRican economy.OutlookThe stable outlook incorporates our expectation that the government will keepits fiscal accounts in check, whether through the eventual passage of thefiscal reform, better tax collection, or further spending cuts. Givenstill-limited (albeit rising in the past few years) monetary flexibility, webelieve fiscal prudence is important for the sovereign to maintain itscreditworthiness. Supported by robust economic prospects, we expect CostaRicas debt to remain at moderate levels, though it will likely rise in theshort term.If political disagreements mount, they would limit fiscal consolidationoptions and weaken governance. This scenario would hamper economic performancewww.standardandpoors.com/ratingsdirect 3 937215 | 300000728
  4. 4. Research Update: Costa Rica Foreign-Currency Ratings Affirmed; Long-Term Local-Currency Rating Lowered Due To Revised Methodologyand external and exchange rate stability, which could eventually lead us tolower the ratings. On the other hand, higher GDP growth and growing taxrevenues could lead to a faster stabilization of the government debt burden,better macroeconomic equilibrium, and improved policy predictability (creatingmore space for exchange-rate liberalization), all of which could contribute toa higher credit rating.Related Criteria And Research• Sovereign Government Rating Methodology And Assumptions, June 30, 2011Ratings ListDowngraded To FromCosta Rica (Republic of) Sovereign Credit Rating Local Currency BB/Stable/B BB+/Stable/BRatings AffirmedCosta Rica (Republic of) Sovereign Credit Rating Foreign Currency BB/Stable/B Transfer & Convertibility Assessment BBB- Senior Unsecured BB+ Recovery Rating 2Complete ratings information is available to subscribers of RatingsDirect onthe Global Credit Portal at www.globalcreditportal.com. All ratings affectedby this rating action can be found on Standard & Poors public Web site atwww.standardandpoors.com. Use the Ratings search box located in the leftcolumn.Standard & Poors | RatingsDirect on the Global Credit Portal | February 13, 2012 4 937215 | 300000728
  5. 5. Copyright © 2012 by Standard & Poors Financial Services LLC. All rights reserved.No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified,reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & PoorsFinancial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as wellas their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of theContent. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, orfor the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIEDWARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS,SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE ORHARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special orconsequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence)in connection with any use of the Content even if advised of the possibility of such damages.Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact.S&Ps opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make anyinvestment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. TheContent should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when makinginvestment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information fromsources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives.To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&Preserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of theassignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result,certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain theconfidentiality of certain nonpublic information received in connection with each analytical process.S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminateits opinions and analyses. S&Ps public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.comand www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additionalinformation about our ratings fees is available at www.standardandpoors.com/usratingsfees.www.standardandpoors.com/ratingsdirect 5 937215 | 300000728

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