The credit quality of Colombian corporates remains resilient despite a slowdown in the economy, according to Fitch Ratings’ Colombian Corporate Outlook Report released Wednesday.
Heavy weighting of the Colombian portfolio to the utilities sector has made the ratings more resilient to economic challenges, Fitch said. Tax increases on corporates and individuals has stifled demand and presented headwinds for operating cash flow growth.
Positively, the startup of several large projects in the energy and telecommunications sectors will boost operating cash flows of Isagen, Emgesa and ISA. Tariff adjustments authorized for the water, gas and energy sectors should also boost corporate cash flow.
The 49 percent local currency depreciation that was experienced during the last 12 months has been from neutral to negative for Fitch-rated corporates. From a balance sheet perspective, companies have only modest exposure to foreign-exchange risk given their ability to obtain financing in the local debt market.
Fitch’s five report outlook series is available at www.fitchratings.com.
