Brazil is laggard of cruising LatAm

The credit quality of infrastructure projects in Latin America should remain unchanged in 2016, Fitch Ratings said in a report on Wednesday. It noted, however, that Brazil was the exception.

“Mexico, Central America and the Caribbean’s growth prospects are favoured by ties with the US economy, while deteriorated macroeconomic conditions in Brazil represent significant challenges to demand,” Glaucia Calp, a senior director at Fitch, said in a statement.

Steady performance is expected across all sub-sectors. According to Fitch, rated exports should continue to exhibit robust performance, while toll roads in Mexico are likely to maintain favourable growth in line with the country’s positive dynamics. Mature toll roads in other Latin American countries should also maintain a stable performance, as their financial performance is generally not dependent on high growth rates.

For Brazil, the outlook is quite different. The ratings agency expects the country’s toll roads to continue to experience weak traffic performance for the next 12 to 18 months, while a negative outlook on Brazilian airports “reflects the potential for continued sluggish growth beyond 2016,” Fitch said.

Weather conditions have not helped the country either, which has been experiencing an extended drought. This has led to negative operating cash flow in hydro projects, with ratings supported by corporate or financial guarantees.

In the rest of the region, power generation projects, such as thermal power plants and wind farms have performed in line with expectations, Fitch said.