UPDATE 1-Fitch revises Colombia credit outlook to positive

By Daniel Bases

NEW YORK, Oct 14 (BestGrowthStock) – Fitch Ratings revised its
outlook on Colombia’s sovereign credit to positive from stable
on Thursday, citing the country’s economic resilience and
improved macroeconomic performance.

Fitch affirmed the BB-plus foreign currency (Read more about trading foreign currency. sovereign
rating. The positive outlook puts Colombia on a path to
investment grade if the rating is lifted one notch.

“Colombia’s expected increase in oil and mining production
will likely benefit overall economic activity and export
receipts, in turn supporting improvements in external solvency
and liquidity metrics,” Fitch said in a statement.

Standard & Poor’s, with a rating of BB-plus and Moody’s
Investors Service at Ba1, rate Colombia the same as Fitch.

The firm also highlighted the smooth transition to the
administration of President Juan Manuel Santos, the former
defense and finance minister elected in June. The British and
U.S.-trained economist took over from the very popular and
staunch U.S. ally Alvaro Uribe.

Fitch said the Andean nation’s creditworthiness continues
to be underpinned by its track record on “macroeconomic
stability, modest external debt, deft liability management, an
unblemished debt service record and greater institutional
strength in comparison to peers.”

These strengths are balanced against weaknesses in external
and fiscal solvency ratios and structural weaknesses in public
finances.

Latin America’s No. 4 oil producer is also fighting against
the upward pressure on its currency, as are other nations in
the region because of high growth rates and strong foreign
investment.

The economy is recovering after slowing to growth of 0.8
percent last year due to the world financial crisis. It is
expected to grow more than 4 percent this year.

The Colombian peso is up more than 12 percent year-to-date
against the U.S. dollar, putting some pressure on exporters.
Foreign investment into the oil and mining sectors has
increased as the government has made big advances in its
U.S.-backed military offensive against leftist rebels.

Fitch highlighted the resilience of the economy not only
from the financial crisis but also “the ‘sudden stop’ of trade
with Venezuela, its second largest trading partner.

“In spite of comparatively slow recovery by regional
standards, Colombia’s five-year average growth, reaching 4.4
percent in 2009 and 4.3 percent in 2010, is expected to
outperform the ‘BB’ median of 3.5 percent and 3.1 percent,
respectively,” Fitch said.

To read the full statement, click [ID:nFIT497728]
(Reporting by Daniel Bases and Pam Niimi; Editing by Andrew
Hay)

UPDATE 1-Fitch revises Colombia credit outlook to positive