Mantega Says Moody’s May Upgrade Brazil’s Rating (Update2)

By Fabio Alves and Andre Soliani
Aug. 26 (Bloomberg) -- Brazil’s Finance Minister Guido Mantega said Moody’s Investors Service may raise the country’s credit rating to investment-grade status as soon as next month.
“It’s good that this happens right after this international crisis because they had a chance to see Brazil being tested by the crisis,” Mantega told reporters in Brasilia today. Brazil passed “the test and therefore will receive a higher grade.”
Brazil’s credit ratings were put on review for an increase to investment grade by Moody’s on July 6, which cited the country’s “demonstrated resilience to shocks” in the global economy. Moody’s is the only one of the three major rating companies that has Brazil below investment grade. Both Standard & Poor’s and Fitch Ratings raised Brazil to BBB-, the lowest investment grade rating, last year. Moody’s ranks Brazil Ba1.
Moody’s will likely make a decision on the rating by Oct. 6, said Eduardo Barker, a spokesman for the New York-based firm.
“The review process, on average, is completed in 90 days, so its conclusion may happen in the next weeks,” Barker said in a telephone interview from New York.
The yield to the 2015 call date on Brazil’s 11 percent bond due in 2040, one of the most widely traded emerging-market securities, dropped two basis points, or 0.02 percentage point, to 8.163 percent at 5 p.m. in New York, according to JPMorgan Chase & Co. The bond’s price rose 0.34 cent on the dollar to 131.835 cents, the highest in three weeks.
Brazil’s Real
Brazil’s real erased losses after Mantega’s comments. The currency was little changed at 1.8620 per U.S. dollar, compared with 1.8616 yesterday. It had weakened as much as 0.8 percent. The real has gained 24 percent this year, the best performance against the dollar among 26 emerging-market currencies tracked by Bloomberg.
“Mantega’s statement made investors more optimistic about better foreign flows into Brazilian assets with a rating upgrade by Moody’s,” said Newton de Camargo Rosa, chief economist at Sul America Investimentos in Sao Paulo.
Brazil’s Bovespa stock index gained 0.6 percent to 57,765.69.
In the overnight interest-rates futures market, the yield on the contract due January 2012 fell four basis points, or 0.04 percentage point, to 11 percent, according to Bloomberg data.