March 31, 2010
Panama City, Panama
It appears that not all is amiss with sovereign debt: Panama may be one of the only bright spots, at least in the western hemisphere… the country recently had its debt rating upgraded by Fitch to ‘investment grade’ with a positive outlook.
Now, I have been quite vocal about my disdain for the ratings agencies… these organizations completely missed the boat before the financial crisis, slapping AAA ratings on shaky subprime bonds. And yet, for whatever reason, the financial community as a whole listens to them.
An investment-grade debt rating is still a major badge of honor for developing countries– something they all strive for but few achieve. In Panama’s case, even though I take umbrage with the rating agencies, the upgrade accurately reflects the country’s very sound economic fundamentals.
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