Credit rating agency Moody's said on Tuesday that the cancellation of the concession to the Chinese conglomerate CK Hutchison for the operation of two ports around the Panama Canal does not directly affect, at least for now, the country's credit profile, which has been implementing macroeconomic policies to avoid losing its investment grade. The Supreme Court of Justice declared on January 29 the contract of concession between the Panamanian state and the company Panama Ports Company (PPC), a subsidiary of the Hong Kong-based CK Hutchison, operator since 1997 of the ports of Balboa (Pacific) and Cristóbal (Atlantic), located in strategic areas of the canal. The next day, the Panamanian government announced that APM Terminal Panama, a subsidiary of the AP Moller-Maersk group, will temporarily take over the operation of both ports, while a new open and transparent tender is held for the concession. "The Supreme Court's decision on the port concession does not have a direct impact on Panama's credit profile," Moody's Ratings said in a comment sent to EFE. However, the agency—which maintains Panama at an investment grade of Baa3 with a negative outlook—warned that a possible international arbitration by the Chinese concessionaire could become a contingent liability with potential effects on public finances, a sensitive point for the sovereign rating. "An adverse ruling against the state could complicate fiscal consolidation, although we see it as unlikely that this process will be resolved in the short term," the rating agency added. In turn, Panama Ports Company reacted by stating that the judicial ruling lacks legal basis and did not rule out activating legal and international procedures to defend its concession.
