International arbitration remains a latent threat. In a comment sent to EFE, Moody's Ratings reiterated that “the Supreme Court's decision on the port concession has a direct impact on Panama's credit profile”. However, the agency —which maintains the country's sovereign rating at Baa3 with a negative outlook— warned that a possible international arbitration by the Chinese concessionaire could become a contingent liability, with potential implications for public finances, a key element in the sovereign rating. “While an adverse ruling against the state could complicate fiscal consolidation, we consider it unlikely that this process will be resolved in the short term,” Moody's added. PPC does not rule out legal actions. Meanwhile, Panama Ports Company stated in a press release that the judicial ruling that strips it of the port operations “lacks legal basis”. The company indicated that it does not rule out activating legal and international procedures in response to the decision adopted by the Supreme Court of Justice. Moody's rules out immediate impact after the Supreme Court's ruling. The rating agency Moody's Ratings affirmed this Tuesday that the cancellation of the concession to the Hong Kong conglomerate CK Hutchison for the operation of two ports around the Panama Canal does not directly affect, at least in the short term, the country's credit profile. The pronouncement comes amid the Panamanian government's efforts to preserve its investment grade, backed by the implementation of macroeconomic policies aimed at strengthening public finances. Port contract was declared unconstitutional. The Supreme Court of Justice of Panama declared on January 29 the concession contract signed between the Panamanian state and the company Panama Ports Company (PPC), a subsidiary of the Hong Kong's CK Hutchison, unconstitutional. Since 1997, PPC had operated the ports of Balboa (Pacific) and Cristóbal (Atlantic), both located in strategic areas near the interoceanic canal. APM Terminals will take over temporary operation. Following the judicial ruling, the Government of Panama announced on January 30 that APM Terminal Panama, a subsidiary of the AP Moller-Maersk group, will temporarily take over the operation of both ports. This measure will remain in place while PPC's exit is finalized and a new open and transparent tender for the port concession is developed.
