Panama: Holding on IG

Research evidence excerpt

Panama: Holding on IG

J P M O R G A N Latin America Economic Research

17 June 2026

• Moody’s recently reviewed Panama and we expect the agency to retain its Emerging Markets Economic and

Baa3 rating through year-end; Fitch remains the only agency below IG. Policy Research

• The Mulino administration has delivered meaningful fiscal consolidation, Holt Williamson

with revenues up 13.2% oya and capital expenditures down 15.9% oya (1-212) 272-1111

holt.williamson@jpmchase.com

YTD.

Katherine Marney

• Panama’s strong growth profile (4% year-to-date with upside from the (1-212) 834-2285

prospective mine reopening) remains the main fiscal anchor. katherine.v.marney@jpmorgan.com

• Peer comparisons, particularly Moody’s tolerance at Baa3 for Colombia, Leonardo(1-212) 834-2479Tiago

suggest the agency has room to hold Panama at its current level. leonardo.tiago@jpmorgan.com

• On sovereign credit, we remain MW, as the balance of evidence supports Ben Ramsey

Moody’s retaining IG in the near-term. (1-212) 834-4308

benjamin.h.ramsey@jpmorgan.com

• We continue to hold our existing basis trade (sell PANAMA 10y CDS / sell J.P. Morgan Securities LLC

PANAMA 6.7% 36) as CDS normalizes.

• We add a new curve RV trade: buy PANAMA 3.36% 31 vs. sell PANAMA

3.16% 30, initiating at 45bp and targeting 15bp.

While Panama lags its rating peers, especially on debt and fiscal metrics, our

view is that it will retain its investment grade rating when Moody’s weighs in

before year-end. As a dollarized economy, Panama faces policy constraints that

bring the fiscal picture into focus and highlight its reliance on external financing.

Dollarization has kept inflation low and acted as a stabilizer for the economy, but

exposes Panama to a turn in market confidence when spreads widen, pushing up

financing costs.