Trump's Canal Threat Roils Panama's Bond Market

JPMorgan downgraded its rating on Panama's bonds following U.S. President Trump's renewed threats concerning the Panama Canal. The move signals heightened sensitivity to potential policy changes impacting the canal, Panama's main revenue source. This uncertainty could challenge Panama's financial stability and affect its sovereign credit rating.

U.S. investment bank JPMorgan has scaled back its recommendation on Panama's bonds, amid escalating tensions after President Donald Trump threatened to reclaim the Panama Canal. This marks a fresh wave of uncertainty for the Central American nation's financial stability, particularly its primary revenue source.

The canal, a pivotal maritime shortcut, had been a focal point during Trump's campaign and now seems firmly in his policy crosshairs. JPMorgan's analysts warn of market sensitivity to such rhetoric, urging investors to tread carefully as Trump offers little clarity on his future plans concerning Panama.

Fears loom over Panama's economy as Fitch Ratings downgraded its credit score to 'junk', potentially setting off a cascade of downgrades by major agencies like Moody's and S&P Global. Still, projections for Panama's near 5% economic growth offer a glimmer of hope amidst the diplomatic uncertainty.

(With inputs from agencies.)