Fitch assigns initial ratings to Peru's EsSalud

Wednesday, December 24, 2014

Fitch assigned Peru's public health insurance system EsSalud an initial long-term foreign currency issuer default rating (IDR) of 'BBB' and a long-term local currency IDR of 'BBB+' with a stable outlook on both.

EsSalud's ratings reflect the close link between the institution and the government of Peru as a public sector institution, Fitch said in a report.

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The ratings agency previously assigned the country long-term foreign and local currency issuer default ratings of 'BBB+' and 'A-', respectively.

Although EsSalud is granted administrative, financial and budgetary autonomy by law, in 2011 it was incorporated into the state business financing fund Fonafe and was subject to certain management standards, policies and procedures. After this move, the control of the state has been stronger and has been reflected in higher operating balances of EsSalud, Fitch highlighted.

Currently, EsSalud has no direct debt or plans on acquiring any, even though Fonafe's regulation allows it. The country has been implementing strict control and prudential regulations regarding debt.

Instead, the entity has resorted to public-private partnership (PPP) schemes and is carrying out four projects regarding the construction and operation of two hospitals and two medical centers in Lima.