Moody’s improves Brazil’s risk rating

Moody’s, a global risk rating agency, raised Brazil’s rating from Ba2 to Ba1, maintaining a positive outlook for the country. According to the agency, the change is due to the country’s more robust growth throughout the year. The initiative takes place a week after the visit of President Luiz Inácio Lula da Silva (PT) and Minister Fernando Haddad, of Finance, to the rating agencies, during their stay in New York.

In a statement, Moody’s also said that the credibility of the fiscal framework is moderate, which is reflected in the cost of debt. The expectation is that public debt should stabilize in the medium term at a relatively high level.

The same agency had already changed Brazil’s credit rating outlook from “stable” to “positive”.

Notes reflect the ability of an institution or country to pay its debts. They can range from AAA (the famous triple A), for the best payers, to D, for those in default.

With the improvement of the risk classification, Brazil is one step away from the so-called investment grade, the cut-off score for an institution or country to be considered a safe haven for capital.

Brazil gained investment grade for the first time in 2008, awarded by S&P. The decision was followed by the other two major agencies: Fitch, in the following month, and Moody’s, in September 2009.

S&P removed Brazil’s investment grade in 2015 amid a context of serious fiscal deterioration. Fitch also cut the investment grade in the same year and downgraded again in 2018. Moody’s removed Brazil’s good paying seal in 2016.