{"id":593,"date":"2009-07-07T21:37:45","date_gmt":"2009-07-08T01:37:45","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/jezler\/?page_id=593"},"modified":"2009-09-22T19:19:22","modified_gmt":"2009-09-22T23:19:22","slug":"moodys","status":"publish","type":"page","link":"https:\/\/archive.blogs.harvard.edu\/jezler\/brazil-credit-ratings\/moodys\/","title":{"rendered":"Moody’s"},"content":{"rendered":"

Brazil Rating Raised to Investment Grade by Moody\u2019s <\/span><\/strong><\/p>\n

Sept. 22, 2009 (Bloomberg) — Brazil\u2019s credit rating was raised to investment grade by Moody\u2019s Investors Service after Latin America\u2019s largest economy built record foreign reserves and averted a prolonged recession amid the global financial crisis.<\/p>\n

Moody\u2019s cited Brazil\u2019s \u201cstrong economic and financial resilience\u201d during the worldwide slowdown as it raised the rating one level to Baa3, the lowest investment grade. The upgrade came a year after Standard & Poor\u2019s and Fitch Ratings increased their ratings for Brazil above junk. Moody\u2019s assigned a positive outlook, signaling it may lift the rating again.<\/p>\n

The country\u2019s foreign reserves<\/a> climbed to $223 billion from a low during the crisis of $199 billion on Feb. 26 as prices for its commodity exports rebounded and investors poured money into the stock and bond markets, encouraged by President Luiz Inacio Lula<\/a> da Silva\u2019s stimulus measures. Reserves were $74 billion three years ago.<\/p>\n

\u201cThe world is pulling out of the crisis and the country came through it displaying a strong resilience,\u201d said Roberto Padovani<\/a>, chief strategist at Banco WestLB do Brasil in Sao Paulo. The upgrade \u201cconsolidates a scenario of low risk for Brazil and it comes at a very important moment,\u201d he said.<\/p>\n

Brazil\u2019s ability to pull through the global financial crisis \u201cpoints to a material improvement in Brazil\u2019s sovereign credit profile,\u201d Mauro Leos<\/a>, Moody\u2019s regional credit officer for Latin America, said in a statement.<\/p>\n

Moody\u2019s \u201cwas waiting to see how Brazil was going to come out from this crisis, whether the crisis was going to be more profound and in the end it wasn\u2019t,\u201d said Pablo Goldberg<\/a>, head of Latin American fixed-income strategy at HSBC Securities in New York. \u201cThe data shows that Brazil has turned the corner.\u201d<\/p>\n

Finance Minister Guido Mantega<\/a>, speaking to reporters outside of the Moody\u2019s office in New York today, said it was \u201cmuch more significant\u201d<\/strong> that the rating company took the action one year after credit markets seized up than if it had upgraded while the global economy was growing.<\/p>\n

The decision \u201cis a recognition of the efficiency with which\u201d Brazil\u2019s economy is being managed, Mantega said. With three investment grade ratings, Brazil will be able to attract more pension fund money to its bond market<\/strong>, he said.<\/p>\n

Brazil is the second country in South America after Chile to have an investment grade rating from Moody\u2019s.<\/p>\n

————————————————<\/p>\n

Brazil Ratings Put on Review for Increase by Moody\u2019s<\/strong>
\n<\/span><\/p>\n

July 6, 2009 (Bloomberg) — Brazil\u2019s credit ratings were put on review for an increase to investment grade by Moody\u2019s Investors Service, which cited the country\u2019s \u201cdemonstrated resilience to shocks\u201d in the global economy. Bonds gained and stocks and the currency pared losses.<\/p>\n

Moody\u2019s placed both the country\u2019s foreign and local ratings of Ba1, or one level below investment grade, on review for upgrade. Moody\u2019s is the only one of the three major rating companies that has Brazil below investment grade. Both Standard & Poor\u2019s and Fitch Ratings raised Brazil to BBB-, the lowest investment grade rating, last year.<\/p>\n

\u201cIt\u2019s warranted for Brazil to be viewed as an investment- grade credit by all three agencies,\u201d Michael Gomez<\/a>, who oversees $45 billion as co-head of emerging markets at Pacific Investment Management Co., said in a telephone interview from Newport Beach, California. \u201cI would say it\u2019s a long time coming.\u201d<\/p>\n

Moody\u2019s decision to signal it may raise Brazil to investment grade amid the global recession underscores President Luiz Inacio Lula da Silva\u2019s success in stockpiling foreign reserves and extending debt maturities since taking office in 2003. Brazil had record reserves<\/a> of more than $200 billion when the financial crisis deepened in September, allowing the central bank to sell dollars and contain the real\u2019s decline while it cut interest rates to shore up a slumping economy.<\/p>\n

\u2018Underlying\u2019 Strengths<\/p>\n

The global credit crisis and recession have uncovered \u201cunderlying structural strengths\u201d in Latin America\u2019s biggest economy, Moody\u2019s said.<\/p>\n

\u201cThe Brazilian authorities\u2019 policy response has been effective in containing the impact of the global crisis, thus providing evidence of increased resilience to shocks, a characteristic integral to an investment-grade credit profile,\u201d Moody\u2019s said.<\/p>\n

Moody\u2019s will likely make a decision as to whether to raise the rating by Oct. 6, Mauro Leos, a New York-based Moody\u2019s analyst, said in a telephone interview. He said the strength of the country\u2019s banks and the government\u2019s decision to shift away from dollar-linked debt are supporting the credit rating.<\/p>\n

The yield to the 2015 call date on Brazil\u2019s 11 percent bond due in 2040, one of the most widely traded emerging-market securities, dropped 9 basis points, or 0.09 percentage point, to 5.14 percent at 4:22 p.m. in New York, according to JPMorgan Chase & Co. The bond\u2019s price rose 0.50 cent on the dollar to 130.35 cents, the highest in a week.<\/p>\n

Currency, Stocks<\/p>\n

An upgrade by Moody\u2019s would allow more investors to buy the country\u2019s bonds because some investors are restricted to buying securities with investment-grade ratings from both S&P and Moody\u2019s, Gomez said.<\/p>\n

\u201cUndoubtedly it\u2019s positive,\u201d Gomez said.<\/p>\n

The real was little changed at 1.9525 per U.S. dollar after earlier losing as much as 1.6 percent to 1.9840, the weakest since June 24. The real is up 18.5 percent against the dollar this year, the second-most among the 16 major currencies after the South African rand.<\/p>\n

The Bovespa<\/a> stock index ended the day down 0.6 percent, after slumping as much as 2.4 percent earlier.<\/p>\n

Brazil\u2019s foreign reserves have climbed to $209 billion from $38 billion when Lula<\/a> took office in 2003 as a surge in the price of the country\u2019s commodity exports swelled dollar inflows. The country became a net creditor for the first time in January 2008.<\/p>\n

Moody\u2019s said in the statement that it will analyze the country\u2019s ability to \u201cfurther reduce debt ratios\u201d in years ahead as part of the review process.<\/p>\n

This \u201cwill be particularly critical given that the debt metrics of the Brazilian government are expected to continue to exceed the corresponding mean for Baa-rated countries,\u201d Mauro Leos, an analyst at Moody\u2019s, said in the statement.<\/p>\n

To contact the reporter on this story: Fabio Alves<\/a> in New York at falves3@bloomberg.net<\/a><\/p>\n

Last Updated: July 6, 2009 18:21 EDT<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Brazil Rating Raised to Investment Grade by Moody\u2019s Sept. 22, 2009 (Bloomberg) — Brazil\u2019s credit rating was raised to investment grade by Moody\u2019s Investors Service after Latin America\u2019s largest economy built record foreign reserves and averted a prolonged recession amid the global financial crisis. Moody\u2019s cited Brazil\u2019s \u201cstrong economic and financial resilience\u201d during the worldwide […]<\/p>\n","protected":false},"author":1642,"featured_media":0,"parent":589,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-593","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/Pab9Mr-9z","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/pages\/593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/users\/1642"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/comments?post=593"}],"version-history":[{"count":4,"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/pages\/593\/revisions"}],"predecessor-version":[{"id":608,"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/pages\/593\/revisions\/608"}],"up":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/pages\/589"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/jezler\/wp-json\/wp\/v2\/media?parent=593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}