Brazil’s real declined from its highest level in two weeks after Moody’s Investors Service cited rising debt and sluggish growth in lowering its outlook on the nation’s credit rating to stable from positive.
Most Latin American nations are well- prepared to confront a worsening debt crisis in Europe and slower growth in the U.S. as China’s commodities purchases give the region a “minimum” level of economic support, Moody’s said.
Mexico may merit a credit-rating upgrade should incoming President Enrique Pena Nieto’s proposals to increase tax revenue and open the energy industry to more private investment succeed, Moody’s Investors Service said.
Pledges made by Mexican ruling party leaders that the government will seek constitutional changes to break the state’s monopoly on oil are “credit positive” for the nation, Moody’s Investors Service said.
The record rout in Brazilian bonds is deepening on speculation President Dilma Rousseff’s vow to boost spending to placate protesters will swell the budget deficit at a time when a stagnating economy saps tax revenue.
Brazilian government bonds are suffering the biggest quarterly losses since the run-up to former President Luiz Inacio Lula da Silva’s election in 2002 led to speculation that the nation would default.
Long vulnerable to periodic financial crisis in neighboring Argentina, Uruguay’s growing ties with Brazil and more diversified exports are prompting investors to bet the country is heading toward its first investment-grade rating since 2002.