Brazil’s government debt is rising “sharply” and is on the high side of the median for BBB-rated sovereign securities, said Shelly Shetty, Fitch Ratings senior director and head of Latin America sovereign debt.
The risk associated with holding Brazilian bonds relative to Peru climbed to a 20-month high on concern President Luiz Inacio Lula da Silva isn’t taking advantage of the fastest growth in two decades to cut debt .
A five-week rally in the Brazilian real is limiting President Luiz Inacio Lula da Silva’s efforts to make the country’s exports more competitive in international markets. Lula himself is partly to blame, according to Harvard University Professor Ricardo Hausmann .
Latin America may see the pace of credit rating increases slow as governments in the region refrain from implementing reforms aimed at broadening their tax base and increasing competition, Fitch Ratings said.
Gruma SAB may take on more debt to close financial derivatives with four banks; Moody’s Investors Service made Chile the first investment-grade country to be awarded a higher credit rating in 2009; Emerging-market stocks recorded more 20 percent swings since October than during any other five-month period and Emerald Energy Plc abandoned its Jacinto No. 1 exploration well in Colombia after failing to find oil.
Mexico had its credit rating raised by Fitch Ratings on the prospect that proposed legal changes will boost growth in Latin America’s second-largest economy. The peso surged to the strongest level since August 2011.