Corporate liquidity in Latin America is adequate; Brazil faces tough policy choices

Moody's Talks - Emerging Markets Decoded

Inside this Episode

Erick Rodriguez of the Corporates team discusses how most companies and public finance projects in Latin America managed to maintain adequate liquidity levels despite the depth of their recessions. Meanwhile, Samar Maziad of the Sovereign group dives deeper into Brazil, the region’s largest economy, to answer the most frequently asked investor questions.

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• Moody's Emerging Markets Hub Bringing clarity to ever-shifting credit dynamics across emerging economies.
• Cross-Sector – Argentina: Tight local market conditions keep corporate liquidity risk high in 2021-22 Despite liability management and the completion of some infrastructure spending, Argentine corporate refinancing risk remains high for the $7.9 billion in debt maturing in 2021-22.
• Cross-Sector – Brazil: Liability management prevents higher liquidity risk through 2022 Much of the short-term debt that Brazilian companies issued during the pandemic comes due through 2022, modestly increasing overall liquidity risk and making liability management crucial.
• Cross-Sector – Chile: Strong commodity prices point to solid performance even as liquidity tightens Liquidity risk increased for Chile's 17 rated non-financial companies, utilities and infrastructure issuers, but most will have enough liquidity to meet their obligations through late 2022.
• Cross-Sector – Mexico: Low liquidity risk and post-pandemic growth will benefit most companies Mexican companies will generally have enough cash on hand, free cash flow, and available committed credit facilities to cover their debt, operating expenses and capital spending through 2022.
• Cross-Sector – Peru: Corporate liquidity holds as improving economy offers some promise for 2021-22 We have seen little change in the number of rated Peruvian non-financial and infrastructure companies; nine of the 17 companies in our annual study have low or medium liquidity risk today.
• Government of Brazil: FAQ on sovereign credit challenges amid slow pace of vaccinations against the coronavirus Recent developments in Brazil (Ba2 stable) remain broadly in line with our baseline scenario. We now expect Brazil’s economy to rebound sharply from last year’s moderate contraction as the spread of the coronavirus slows in the second half of the year.