If in Europe the rating agencies wield the whip of austerity, in South America they dispense bonuses. Yesterday, Moody's upgraded the rating of Brazilian government bonds from Baa3 to Baa2. The last increase was made in September 2009, raising its rating from Ba1 to Baa3.
Brazil has done its homework: sovereign credit performances are consistent with Baa margin levels, recent adjustments in public policies and the prospect of improvement in fiscal indicators and medium-term growth should lead to a more sustainable macroeconomic scenario . In short, the outlook for Brazil's rating continues to be positive.
In the press release, the agency states that the good intentions of the South American country mean the possibility of a new elevation of the classification between the next 12 and 18 months. “This will be possible if economic growth moderates and continues at lower but more sustainable rates and if the authorities meet short-term budget targets.”
Otherwise, continues Moody's note, "if there is no evidence of significant progress in these areas, the potential for improvement associated with the positive outlook may be removed, leaving the country's credit rating at its current Baa2 level."
Tonight the Brazilian Stock Exchange closed positively, with the reference index, the Bovespa of Sao Paulo up by 0,18%. The real strengthened slightly against the dollar (+0,13%), also due to the weakness of the North American currency abroad.
