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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (109894)	11/18/2011 4:23:44 AM
From: elmatador	Respond to of 110194

“The decision by S&P to upgrade Brazil’s debt at a delicate moment of the international economy is recognition that our economic policies are going in the right direction and that the macroeconomic fundamentals of our country are solid,” the ministry said. S&P upgrades Brazil’s credit rating By Joe Leahy in São Paulo Standard & Poor’s has become the third ratings agency this year to upgrade Brazil’s sovereign debt in a vote of confidence for the country that stands in contrast to the situation in Europe and the US. In a year in which the US faced the first ever downgrade of its credit rating, Moody’s, Fitch and now S&P have raised their foreign and local currency credit ratings for Brazil to reflect the government’s strong finances. “We expect the government to pursue cautious fiscal and monetary policies that, combined with the country’s growing economic resilience, should moderate the impact of potential external shocks and sustain long-term growth prospects,” S&P said. The move, under which Brazil’s foreign currency credit rating was raised one notch to “BBB” and its local currency rating to “A-“, emphasises the growing divergence between the fast-growing large emerging markets, led by China, Brazil and India, and the advanced economies. Brazil’s debt fundamentals are already seen as superior to many European countries by markets, with spreads on the Latin American country’s debt trading tighter than those of many eurozone countries. Earlier this month, Brazil’s Treasury announced it had sold $1bn of 30-year bonds after reopening a bond first sold in 2009. At that point, the bonds were yielding just less than 5 per cent, while the yield on Italian 30-year bonds was trading at about 7 per cent. Brazil’s gross domestic product is expected to grow at more than 3 per cent this year, less than half last year’s 7.5 per cent but still enough to sustain the growth of its middle classes. After bingeing last year on credit, the government of President Dilma Rousseff has this year clamped down on state expenditure in a bid to limit the growth of the primary surplus – the budget balance prior to debt payments. News and comment from emerging economies, headed by Brazil, Russia, India and China “The upgrade of Brazil is supported by the current administration’s growing track record of prudent macroeconomic policies, including fairly consistent primary surpluses of close to 3 per cent of GDP,” said Sebastián Briozzo, S&P’s credit analyst Brazil, however, has not been immune to the global economic slowdown with evidence developing of a “two-speed” economy, with domestic manufacturing veering towards recession even as consumer demand and credit growth have remained relatively buoyant. The government has been keen to shore up growth with the central bank cutting benchmark interest rates and the administration beginning to unwind controls on credit. S&P warned that any serious slippage on controlling inflation or a return to fiscal largesse would potentially cost Brazil its rating. But Brazil’s ministry of finance said the upgrade showed the government was headed in the right direction. “The decision by S&P to upgrade Brazil’s debt at a delicate moment of the international economy is recognition that our economic policies are going in the right direction and that the macroeconomic fundamentals of our country are solid,” the ministry said.