RIO DE JANEIRO, BRAZIL – A country loses its investment-grade when it is downgraded by two or more agencies, and Fitch Ratings and Standard & Poor’s have moved.
Colombia has lost the investment-grade it held for a decade on long-term sovereign debt after Fitch Ratings became the second major rating agency to downgrade the country to “junk.”
Fitch’s decision comes after a similar move by Standard & Poor’s in May. A country loses its investment-grade if two or more agencies downgrade it.
Fitch said its decision reflects deteriorating public finances with large budget deficits from 2020 to 2022, rising government debt, and declining confidence in the government’s ability to reduce debt in the coming years.
According to the Financial Times, Fitch forecasts that Colombia’s public debt will exceed 60 percent of gross domestic product this year, more than double the level at which the country achieved investment grade in 2011.
The expectation of fiscal deterioration comes after the government withdrew a tax reform bill from Congress following fierce protests.