JPMorgan Reduces Panama Rating in Response to Trump’s Pledge to Reclaim Canal
Trump has promised to reclaim the Panama Canal that was ceded to Panama by the United States in 1999.
JP Morgan, a financial services giant, has downgraded its assessment of Panama’s bonds due to concerns that the United States might take back the Panama Canal.
On Jan. 23, JP Morgan’s Global Emerging Markets Research analysts lowered their rating of Panamanian debt from “overweight” to “marketweight,” indicating that the bonds are expected to perform in line with the relevant index, sector, or benchmark credit returns.
A team of analysts at JP Morgan, headed by Gorka Lalaguna, an emerging markets sovereign credit strategist, linked the downgrade directly to President Donald Trump’s recent statements about the Panama Canal.
Following his victory in the general election in November 2024, Trump floated the idea of the U.S. reclaiming the Panama Canal, completed by the U.S. in 1914 and turned over to Panama in 1999.
During his inauguration, Trump declared, “We’re taking it back.” He expressed dissatisfaction with the terms of the agreement and accused Panama of not honoring its promises to the U.S.
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President Jose Raul Mulino of Panama affirmed in a statement on Jan. 20 that the canal “belongs to Panama and will continue to do so.”
The JP Morgan analysts, led by Lalaguna, foresee potential for cooperation and positive diplomatic engagement between the U.S. and Panama.
They also suggested that the Trump administration might resort to punitive actions and speculated on two possible motives behind Trump’s focus on Panama—relief from Chinese tariffs and pressure on Chinese operations in the Canal.
In his inaugural address, Trump accused China of controlling the Panama Canal, hinting at the involvement of CK Hutchison Holdings Ltd., a Hong Kong-based company that oversees certain port operations in the Canal.
Although the Panama Canal Authority governs the waterway, Chinese companies manage the ports and cover expenses.
The JP Morgan analysts indicated the possibility of heightened tensions but expressed hope for a resolution that avoids escalation.
