São Paulo – Early this Monday (4th), the Fitch Ratings agency announced that it has upgraded Brazil’s rating. According to Fitch, the country is now one level above investment grade.
In a statement, the agency states that Brazil may withstand economic shock and has a sustainable growth potential ranging from 4% to 5%, supporting the medium-term fiscal outlook. It was Fitch’s first upgrade of Brazil since 2008, when the agency declared the country to be investment grade.
The agency also claims that the transition from Luiz Inácio Lula da Silva’s administration into president Dilma Rousseff’s was smooth and posed no threat to economic stability, because the current government does not signal with major changes in economic policy.
The foreign and domestic currency issuer default ratings have been upgraded from "BBB-" to "BBB." The country ceiling was upgraded from "BBB" to "BBB+." The short-term rating has also improved. Brazil, however, is still far from getting the highest rating, which is "AAA."
The "BBB" rating indicates that the country is of average quality when it comes to receiving investment and meeting its commitments. The lowest grade is "DDD," which indicates that a given country or corporation is falling behind on its payments and is not worthy of trust when it comes to receiving investment.
Fitch Ratings was the first of the three major rating agencies (the other two are Standard & Poor’s and Moody’s) to upgrade Brazil (read Finance minister Guido Mantega’s comment on the link below).
*Translated by Gabriel Pomerancblum
