Fitch Ratings expects Colombian corporates cash flows to continue seeing
pressure from rising taxes as the Colombian government seeks to offset
declines in tax revenues from the oil sector.
This pressure could be alleviated if the government gains the ability to
expand its tax base. Consumers' disposable income has been also hit by
higher personal income tax rates and inflation pressure caused by the
sharp currency depreciation. Increasing corporate exports will not be a
short term solution for the woes faced by issuers. Corporates will need
time to rebuild export channels following the sharp appreciation of the
U.S. dollar against the Colombian peso during 2015.
Fitch revised its previous expectations of GDP growth down to 3.0% in
2015 and 3.5% in 2016. Weakening terms of trade and low oil prices have
hurt the economy. Economic growth will continue to depend upon the
country's fourth generation infrastructure projects (4G) and a dynamic
The Rating Outlook for Colombian corporates is Stable, despite
challenging economic conditions. Most corporates continue to maintain
conservative credit profiles despite increasing leverage trends.
Refinancing risk remains manageable due to robust liquidity position and
access to diverse funding sources.
The full report 'Colombia Corporates Low Oil Prices Lead to Rising
Corporate Taxes' is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Colombian Corporates (Low Oil Prices Lead to Rising Corporate Taxes)
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AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
View source version on businesswire.com: http://www.businesswire.com/news/home/20150923006269/en/
Copyright Business Wire 2015
Source: Business Wire
(September 23, 2015 - 3:32 PM EDT)
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