Brazil Earns Another Credit Rating Upgrade

One of the so-called Big Three ratings agencies took time out of what has been a busy year of finger-wagging at the United States and several European nations over debts levels it remains uncomfortable with to give another upgrade to one of the world’s most noted emerging economies. And despite fears of inflationary pressure and widespread hints of a forming credit bubble, the outlook for Brazil looks “positive.”

Moody’s Investors Service upgraded the government bond ratings of Brazil, to Baa2 from Baa3, as well as the nation’s foreign currency ceilings. It also gave the nation a “positive” ratings outlook.

Moody’s noted Brazil presently carries strong fundamentals that are no more than moderately susceptible to financial event risk (such as the aforementioned credit boom similar to the one that eventually leveled the U.S. economy), has a perceived willingness from officials “to reverse expansionary policies and adopt a conservative policy stance” and demonstrates declining government debt ratios. 

“High economic strength stems from large and relatively diversified productive and export bases,” according to Monday’s announcement. “Policy continuity as well as a government debt structure associated with moderate exchange rate, rollover and interest risks are integral elements of Brazil's sovereign credit profile. Prospective elements are encouraging. Our baseline expectation is for relatively favorable and more sustained economic growth in coming years.”

Brian Shappell, NACM staff writer

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