Beat Siegenthaler of Commerzbank issues today an update on the Dominican economy, focusing on the concerns that the opposition-dominated Congress could delay legislation and cause overspending. Nevertheless, he is optimistic that the restructuring terms will be made by the end of March. “We expect an extension of maturities and some interest capitalization but no haircut on principal or coupon payments,” he writes.
He focuses on the macroeconomic situation, commenting that this has stabilized significantly, with growth of 4% expected for the year and inflation dropping sharply. He writes that total public debt is likely to fall below 50% this year, and below 45% in 2006. “Fundamentally, the DR looks in better shape than some of its peers.”
In his opinion, the country could be upgraded to B/B2 as soon as the exchange has been successfully implemented. He explains that credit spreads should then tighten towards regional peers with similar ratings.
To read the complete Commerzbank report, see http://dr1.com/news/2005/031105_commerzbank.shtml