Investment-grade Ratings, Higher Interest Rates And Aversion To Populism Attract Asset Managers

摘要

Last April, Standard & Poor's granted an investment-grade rating to Brazil's sovereign debt. Fitch Ratings followed in May; it raised Brazil's foreign-currency debt rating from BB+ to BBB-, its lowest investment-grade level, matching the move by S&P. These upgrades are expected to give Latin America's biggest economy expanded access to capital, as some institutional investors are permitted to buy securities only in countries with two investment-grade ratings. "Further appreciation of Brazil's currency, the real, will be the first effect of the Fitch upgrade, following the month-earlier upgrade by S&P," says Carlos Thadeu de Freitas, head of economics at the National Confederation of Trade (CNC). A former director of Brazil's central bank, Freitas foresees more foreign capital entering Brazil. The strengthening of the real got another boost from the central bank's hike in interest rates. On June 4, the bank raised the benchmark-lending rate a half percentage point, from 11.75 percent to 12.25 percent, to slow accelerating inflation caused by expanding consumer demand and rising food prices.