Brasília – Moody’s rating agency has increased Brazil’s grade from Baa3 to Baa2, “with possible upgrade” perspective. According to the Moody’s statement, the change in classification is due to the “most recent adjustment” in the country’s economy that point towards more sustainable macroeconomic scenery and improvement in medium term fiscal indices”.
The rating identifies to investors the country and its company’s capacity to honour its financial engagements. In April, Fitch, another rating agency, had already improved Brazil’s rating from BBB- to BBB.
According to the Moody’s statement, the perspective is for possible upgrade over the next 12 or 18 months, if economic growth is moderate, at lower rates, though sustainable, and authorities remain prepared and capable of accomplishing the budget targets for the medium term. If that does not take place, the perspective is for Brazil to be maintained at the current Baa2.
The last time that the country rating was changed by Moody’s was on September 22, 2009, when the grade was updated from Ba1 to Baa3.
Last Friday (15), Finance minister Guido Mantega announced that the risk of Brazil not paying its debts is currently lower than that of the United States. In this case, the minister was referring to another evaluation by the financial market, the so-called Credit Default Swap (CDS), a kind of insurance to investors against debtors not being honouring their obligations.
*Translated by Mark Ament
