U.S. investment bank JPMorgan has downgraded its recommendation on Panama's bonds after U.S. President Donald Trump ramped up his threat this week to "take back" the Panama canal.
The Central American country's bonds have been struggling since Trump made the pledge during his election campaign, but JPMorgan's analysts said its prominence during his inauguration speech on Monday had ratcheted up the stakes.
The canal, which was once owned by the United States but was handed over to Panama decades ago, gives vessels a much shorter route between the Caribbean Sea and Pacific Ocean.
While the two countries could end up resolving the issue, "the potential noise associated to the path that could get us there should cause markets to be increasingly sensitive to headline risks," the analysts warned.
Combined with "little clarity on the endgame" for Trump, they cut Panama's bonds to "market weight" from "overweight" - effectively a signal to exposed investors to scale back.
The Central American country's bonds have been struggling since Trump made the pledge during his election campaign, but JPMorgan's analysts said its prominence during his inauguration speech on Monday had ratcheted up the stakes.
The canal, which was once owned by the United States but was handed over to Panama decades ago, gives vessels a much shorter route between the Caribbean Sea and Pacific Ocean.
While the two countries could end up resolving the issue, "the potential noise associated to the path that could get us there should cause markets to be increasingly sensitive to headline risks," the analysts warned.
Combined with "little clarity on the endgame" for Trump, they cut Panama's bonds to "market weight" from "overweight" - effectively a signal to exposed investors to scale back.
12 days ago
