S&P Upgrades Brazilian Sovereign Ratings

Standard & Poor’s Rating Service announced , as of Nov-17th , an upgrade on the long-term foreign currency sovereign rating on the Federative Republic of Brazil to 'BBB' from 'BBB-', with stable outlook. The Brazilian long-term local currency debt was also upgraded to 'A-' from 'BBB+'.

S&P`s revision on Brazil`s sovereign ratings, in this specific delicate external scenario, reflects the robust macroeconomic fundamentals of the country and its sound economic policies.

In an environment in which many sovereign credit risk ratings have been deteriorated, this announcement reinforces the success of the Brazilian economic policy management in its efforts to strengthen the country.

According to S&P`s press release, the decision is supported by the current administration's growing track record of prudent macroeconomic policies, including fairly consistent primary surpluses of close to 3.0% of GDP. This provides greater scope for a more flexible monetary policy to play a more significant countercyclical role.

The combination of Brazil's sustained political commitment to cautious economic policies, its diversified economy, and its gradually enhancing external profile should moderate the impact of potential external shocks and sustain its long-term growth prospects.