Standard & Poor’s Lowers Ratings for Five Peru Banks

Standard & Poor’s lowered its rating for five Peruvian banks, which points towards a more difficult economic environment for the Andean nation,

The agency gave lowered the rating from BBB to BBB- for Banco de Credito del Peru, the country’s largest bank, as well as Banco Interamericano de Finanzas (BanBif), BBVA Banco Continental, MiBanco and Interbank, according to Gestion.

Standard & Poor’s gave a stable outlook for BCP, BBVA, MiBanco and Interbank, while it gave a negative outlook for BanBif.

“This lower note reflects our opinion of greater economic risks for banks that operate in Peru, which ratifies our perspective on the growth of Peru,” Standard & Poor’s said. “We believe that the trajectory of the country won’t be consistently above its peers with a similar economic development.”

The agency’s decision follows months of weak growth in Peru, although there are also signs of an economic recovery going into the second half of 2015, thanks to increased mineral production and the start of construction on infrastructure projects. In July, Peru’s copper production rose almost 30% compared to the same month in 2014, according to the Mines and Energy Ministry. Copper is Peru’s top export.

Late last month, Standard & Poor’s reaffirmed its long-term foreign currency rating for Peru at BBB+ and its long-term local currency rating of A-, with stable outlooks.

The agency said in a statement that it was expecting Peru’s economic growth to expand on average at 3.7% per year from 2015 to 2018, which is still robust compared to many countries but far slower than the previous decade when annual growth was about 6%.

“The stable outlook reflects our view that Peru remains well placed to conduct some countercyclical policy and can manage a widening of its current account deficit and some increase in external debt despite potential local and global market volatility ahead of the 2016 presidential elections and a more challenging global backdrop,” the agency said.

Finance Minister in New York to appeal to MSCI

Meanwhile, Peru’s Finance minister, Alonso Segura, is in New York today to convince Morgan Stanley’s Capital International division, MSCI, to reconsider its downgrading of the Lima Stock Exchange from Emerging to Frontier.

Segura is in New York with the chairman of the Central Bank, Julio Velarde, as well as Lilian Rocca, superinendent of the stock market; Christian Laub, president of the Lima Stock Exchange; and Francis Stenning, president of Cavali, the securities and settlements registry.

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