Ecuador’s credit outlook was raised to positive from stable by Fitch Ratings as higher than budgeted prices for the OPEC nation’s oil boosted economic growth and reduced the need to borrow.
Fitch said today in a statement that it affirmed the South American country’s credit rating at B-, six levels below investment grade. Ecuador, which defaulted on $3.2 billion of its global bonds in 2008 and 2009, was raised by Fitch from CCC in November 2010, Bloomberg data show. Fitch’s change in Ecuador’s outlook follows upgrades from Moody’s Investors Service in September and Standard & Poor’s in June.
Oil revenue is allowing the government to boost public investment and limit borrowing, Fitch said. Crude oil prices have averaged about $17 more a barrel than the country’s Finance Ministry budgeted this year, according to data compiled by Bloomberg.
“Ecuador’s ratings currently balance comparatively stronger fiscal and external solvency indicators against the sovereign’s weak debt service record, limited sources of financing and high commodity dependence,” analyst Santiago Mosquera wrote in the statement.
Ecuador’s gross domestic product grew 5.2 percent in the second quarter from a year earlier, according to an Oct. 5 report from the central bank. Ecuador is the Organization of Petroleum Exporting Countries’ smallest member.