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Stable Ratings Despite Deteriorating Asset Performance Asset Performance Outlook: Deteriorating ���������ֳ�’ asset performance outlook heading into 2023 is expected to deteriorate for most sectors in both international and national scale Latin American Structured Finance (SF). Macroeconomic conditions will degrade, weighing on job growth and consumer demand. Exceptions include assets across ���������ֳ�’s Latin American Salary-Assignment Loan ABS portfolio, where transactions are mainly backed by pension deductible loans with stable repayment sources and credit-linked notes where asset performance is driven by the credit quality of the underlying risk presenting entities, most of which have a Stable Rating Outlook. Rating Outlook Distribution: Stable Rating Outlooks are mostly Stable across sectors with an improved net outlook balance. The proportion of Negative Rating Outlooks as of 3Q22 has decreased to pre-pandemic levels. This is partly attributed to a majority of Latin American sovereign’s having Stable Rating Outlooks, shown in the “Latin America Sovereign Ratings” chart on page 4. We expect positive rating momentum to decline as performance weakens, resulting in fewer upgrades in 2023. Sovereign Regional Sector Outlook: Neutral The majority of the Latin American sovereign ratings have a Stable Rating Outlook, with only Peru on a Negative Rating Outlook; El Salvador and Argentina are currently below the ‘B’ rating category. We expect weaker regional growth in 2023 after 2022 was stronger than expected. Nevertheless, the considerable slowdown is expected to come with some inflation relief in the region. Regardless, proactive monetary policy tightening, lower inflation, steady and adequate external buffers, prevalence of flexible exchange rates and better than expected fiscal performance in 2022 will help countries navigate an increasingly challenging global backdrop.