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Falling Remittances, Exports To Push Guatemalan Current Account Into Deficit Published: 24 April 2020

  • Guatemala’s current account will flip from a surplus of 2.2% of GDP in 2019 to a deficit of 0.2% in 2020 as a large recession in the US undermines remittance inflows and demand for Guatemalan exports.
  • As a result, we at Fitch Solutions have revised down our 2020 current account forecast from a 1.5% surplus to a 0.2% deficit.
  • While steeper than expected recession in the US poses downside risks to our forecast, sizeable foreign reserves bolster Guatemala’s overall account stability.

(Source: Fitch)

Oil rallies on Gulf tensions and output cuts Published: 24 April 2020

  • Oil rose on Thursday, spurred by rising tensions in the Middle East, output cuts by producing nations to tackle oversupply and the promise of more government stimulus to ease the economic pain of the new coronavirus pandemic.
  • Brent crude was up $1.53, 7.5%, at $21.90 a barrel by 0822 GMT. U.S. crude rose $1.53, or 11.1%, at $15.31 a barrel.
  • The rally on Thursday followed an announcement from President Donald Trump he had instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf, although he added later he was not changing the military’s rules of engagement.

(Source: CNBC)

Record U.S. jobless claims wipe out post-Great Recession employment gains Published: 24 April 2020

  • A record 26 million Americans likely sought unemployment benefits over the last five weeks, confirming that all the jobs created during the longest employment boom in U.S. history were wiped out in about a month as the novel coronavirus savages the economy.
  • Thursday’s weekly jobless claims report from the Labor Department will add to a growing pile of increasingly bleak economic data.
  • It will come amid rising protests against nationwide lockdowns to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus.

(Source: CNBC)

Strong Revenue Growth Boost Eppley’s Bottom-Line Published: 22 April 2020

  • For the year ended December 31, 2019, Eppley Ltd. reported a 35.7% (or $43.04Mn) increase in net profit to $163.52Mn (EPS: $0.85) from $120.48Mn (EPS: $0.63) made in the prior year.
  • This favourable movement was primarily driven by a 2.8% ($4.18Mn) increase in net interest income and a 72.1% (or $67.72Mn) increase in other operating income, outstripping the 18.9% (or $26.02Mn) increase in admin expenses.
  • The company’s stock price has risen 20.6% since the beginning of the year to end Tuesday’s trading session at $17.00. The stock currently trades at a P/E of 20.0x earnings, which is above the Main Market Financial Sector Average of 14.6x earnings.

 (Source: Eppley Financials)

SML Profit Plummets for the Period Ended December 31, 2019 Published: 22 April 2020

  • Stanley Motta Limited (SML) reported audited net profits of $281.29Mn (EPS:37¢) for the year ended December 2019, representing a 85.9% (or $1.72Bn) decrease in its bottom line relative to the corresponding period in 2018.
  • The main contributor to this performance was a 9.72% (or $1.85Bn) reduction in revaluation gains. This was due to a one-off gain being booked upon the revaluation of the company’s properties during the prior year.  Excluding this one-off gain net profit would have grown $131.76Mn (135.5%), courtesy of a $150.09Mn (or 55.5%) growth in revenue.
  • The stock has declined 15.6% since the start of the year, and closed trading at $5.03 on Monday. At this price, SML currently trades at a P/E of 13.6x earnings, which is above the Main Market Real Estate Sector Average of 11.5x.

(Source: SML Financials)

IMF approves emergency financing for Panama Published: 22 April 2020

  • The International Monetary Fund (IMF) said it approved a request from Panama for roughly $515 million in emergency financing to help address the economic impact of the coronavirus outbreak.
  • The IMF granted Panama the equivalent of 377 million special drawing rights (SDRs) through its Rapid Financing Instrument (RFI) to cover rising healthcare costs and fill part of a gap in the balance of payments of around $3.7 billion
  • The Panamanian government could relax spending limits in 2020 to increase healthcare spending and make cash transfers to the poor through the Panamá Solidario program. The spending limits would again come into effect in 2021, according to the IMF.

(Source: Latin Finance)

Mexico and Pemex credit ratings cut by Moody's and Fitch Published: 22 April 2020

  • Moody's downgraded its credit rating on Mexico to Baa1, and joined Fitch Ratings with a cut to the Mexican state-owned oil company Pemex's rating as well, with both companies on Friday citing weak economic growth prospects and sharp drops in the price of oil.
  • Moody's cut Pemex to junk status, lowering the rating to Ba2 from an investment grade Baa3. Meanwhile, Fitch cut the company further into junk status, dropping the rating to BB- from BB.
  • Moody's maintained negative outlooks on both the sovereign and Pemex. It said Mexico's medium term economic growth prospects have materially weakened and that the "continued deterioration in Pemex's financial and operational standing is eroding the sovereign's fiscal strength, which is already pressured by slower revenue growth due to a weaker economy."

(Source: Latin Finance)

Oil continues unprecedented sell-off: June futures drop 20%, May contract still has a negative price Published: 22 April 2020

  • West Texas Intermediate crude futures for May delivery reversed gains to trade in negative territory again on Tuesday, one day after plunging below zero for the first time in history. The contract expires today, which means that thin trading volume has contributed to the wild price action.
  • The massive selling gripping the oil market is now spreading to more futures contracts, worrying investors about the deep economic damage being done by the coronavirus shutdowns.
  • The contract for June delivery, which is the more actively traded and therefore a better indication of how Wall Street views the price of oil, slipped more than 20% to $16.24 per barrel. Earlier in the session it had dipped below $15. The contract for July delivery fell roughly 11% to $23.42.

 (Source: CNBC)

10-year yield hits lowest level since March as historic oil plunge stokes fears about the economy Published: 22 April 2020

  • Treasury yields fell on Tuesday as a stunning drop in oil prices raised concern about the global economy. The U.S. 10-year rate fell to 0.55%, hitting its lowest level since March. The 2-year yield traded at 0.189% while the 30-year bond yielded 1.129%. Yields move inversely to prices.
  • Tuesday’s decline in yields comes after U.S. oil prices tumbled below zero for the first time on record, with crude storage facilities filling rapidly and as the coronavirus crisis ravages demand.

(Source: CNBC)

S&P Revised Jamaica’s Outlook To Negative From Stable On Pandemic Impact; B+ Ratings Affirmed Published: 18 April 2020

  • On April 16, 2020, S&P Global Ratings revised its outlook on Jamaica to negative from stable. At the same time, S&P Global Ratings affirmed its 'B+/B' long-term and short-term foreign and local currency sovereign credit ratings.
  • The COVID-19 pandemic will temporarily halt economic growth and fiscal progress in Jamaica, putting pressure on the country's external accounts and government finances.
  • It is expected that the pandemic-related decline in tourism and other sectors will have a negative impact on the country's revenues, which together with government spending, will result in a fiscal deficit in the current year.
  • The negative outlook reflects the risks that the effects of the COVID-19 outbreak will be more severe or prolonged than we currently expect, leading to a sustained fiscal deficit or more strained external accounts.

 (Source: S&P)