São Paulo- Credit rating agency Standard & Poor’s has reaffirmed Brazil’s BBB- grade this Monday evening (23rd), an indication that the country honors its debts. The grade qualifies Brazil as investment grade, signaling to foreign investors that the country is unlikely to default on its obligations.
Standard & Poor’s is one of the world’s three major rating agencies, alongside Fitch and Moody’s. International investors base their decisions on whether to invest or not based on the “grades” said agencies award to countries and businesses. Many investment funds have a rule of only venturing into countries or enterprises rated investment grade by at least two of these agencies.
Their assessment is made over economic indicators from the countries and companies evaluated. The grade BBB-, however, is the lowest one within the investment grade parameters of Standard & Poor’s. A grade lower than that means that the country has a “speculative” grade.
The agency believes that the measures taken by the economic team to turn back the economy to growth again will have the support of president Dilma Rousseff and the Congress, which, in turn, will start a recovery of Brazil’s credibility and growth in 2016. Among the measures announced by Finance minister Joaquim Levy are tax raises, recovery of the administered prices (such as fuels and electric power) and spending cuts.
*Translated by Gabriel Pomerancblum and Sérgio Kakitani
