Standard & Poor’s regarding Peru’s improved credit
https://podcasts.standardandpoors.com/NewsDemo.aspx?newsid=3435
Here is an article from Bloomberg as well:
By Ye Xie
Aug. 31 (Bloomberg) -- Peru’s foreign debt rating was raised above Brazil and Colombia by Standard & Poor’s amid signs that President Ollanta Humala will continue policies that have made the country the region’s fastest-growing economy.
S&P raised Peru to BBB, the second-lowest investment grade, from BBB-. The outlook is stable. Peru’s rating is one step above those of Brazil, Latin America’s largest economy, Colombia and Panama, which share the BBB- rating.
Humala, who took office last month, has pledged to honor investors’ contracts and spur private investment, distancing himself from vows during the presidential campaign to expand the government’s control on the economy. Peru’s currency rose to a three-year high last month after Humala signaled maintaining existing economic policies by reappointing central bank President Julio Velarde and picking Luis Miguel Castilla, a Harvard University-trained economist, as finance minister.
“We expect that broad fiscal and monetary policy continuity under Peruvian President Ollanta Humala’s new government will support stronger economic policy flexibility and growth,” S&P’s analysts including New York-based Richard Francis, said in a statement.
The Andean country’s economic growth averaged 6.4 percent in the past decade, almost twice as fast as Brazil, as policy makers tapped into a global mining boom while curbing inflation and the budget deficit. Debt in Peru, the world’s third-largest copper and zinc producer, amounted to 23.6 percent of its domestic product, compared with 60.8 percent in Brazil and 44.8 percent in Colombia.
Political Concerns
“Peru has all the indicators to have a higher rating, and the only constraint is that the political institution is fragile,” said Pedro Tuesta, a former Peruvian central banker who is a senior economist at 4cast Inc. in Washington. “If investors don’t come back because they are still worried about the role of the state in the economy, growth may not continue at 6, 7 percent. That’s an ongoing concern.”
Peru, sixth-largest economy in Latin America, is still rated one step below Brazil at Fitch Ratings and Moody’s Investors Service.
Peru’s local bonds tumbled on June 6 and stocks lost a record 12.5 percent as Humala’s victory in a run-off election raised concern that the ex-military rebel will boost government control of natural resources and increase mining royalties.
Bonds have since recovered as Humala pledged in his inaugural speech on July 28 to maintain existing policies that will encourage private investment in mining and oil and gas projects. Yields on benchmark 2020 notes fell to 5.67 percent yesterday, the lowest level since November, from 6.9 percent on June 6.
“The government’s commitment to economic stability and a positive investment climate supports the ratings on Peru,” S&P said. “We believe that these factors likely will underpin solid growth through 2013 despite global uncertainties.”
Standard & Poor’s regarding Peru’s improved credit rating: https://podcasts.standardandpoors.com/NewsDemo.aspx?newsid=3435
Here is an article from Bloomberg as well:
By Ye Xie
Aug. 31 (Bloomberg) -- Peru’s foreign debt rating was raised above Brazil and Colombia by Standard & Poor’s amid signs that President Ollanta Humala will continue policies that have made the country the region’s fastest-growing economy.
S&P raised Peru to BBB, the second-lowest investment grade, from BBB-. The outlook is stable. Peru’s rating is one step above those of Brazil, Latin America’s largest economy, Colombia and Panama, which share the BBB- rating.
Humala, who took office last month, has pledged to honor investors’ contracts and spur private investment, distancing himself from vows during the presidential campaign to expand the government’s control on the economy. Peru’s currency rose to a three-year high last month after Humala signaled maintaining existing economic policies by reappointing central bank President Julio Velarde and picking Luis Miguel Castilla, a Harvard University-trained economist, as finance minister.
“We expect that broad fiscal and monetary policy continuity under Peruvian President Ollanta Humala’s new government will support stronger economic policy flexibility and growth,” S&P’s analysts including New York-based Richard Francis, said in a statement.
The Andean country’s economic growth averaged 6.4 percent in the past decade, almost twice as fast as Brazil, as policy makers tapped into a global mining boom while curbing inflation and the budget deficit. Debt in Peru, the world’s third-largest copper and zinc producer, amounted to 23.6 percent of its domestic product, compared with 60.8 percent in Brazil and 44.8 percent in Colombia.
Political Concerns
“Peru has all the indicators to have a higher rating, and the only constraint is that the political institution is fragile,” said Pedro Tuesta, a former Peruvian central banker who is a senior economist at 4cast Inc. in Washington. “If investors don’t come back because they are still worried about the role of the state in the economy, growth may not continue at 6, 7 percent. That’s an ongoing concern.”
Peru, sixth-largest economy in Latin America, is still rated one step below Brazil at Fitch Ratings and Moody’s Investors Service.
Peru’s local bonds tumbled on June 6 and stocks lost a record 12.5 percent as Humala’s victory in a run-off election raised concern that the ex-military rebel will boost government control of natural resources and increase mining royalties.
Bonds have since recovered as Humala pledged in his inaugural speech on July 28 to maintain existing policies that will encourage private investment in mining and oil and gas projects. Yields on benchmark 2020 notes fell to 5.67 percent yesterday, the lowest level since November, from 6.9 percent on June 6.
“The government’s commitment to economic stability and a positive investment climate supports the ratings on Peru,” S&P said. “We believe that these factors likely will underpin solid growth through 2013 despite global uncertainties.”
Bond Risk
The cost of protecting Peruvian bonds against non-payment for five years fell 5 basis points, or 0.05 percentage point, to
161 yesterday, the credit-default swaps show. The default swaps were 9 basis points higher than Brazil’s, narrowing from 68 basis points in April.
S&P yesterday also lifted Paraguay’s rating to BB-, three steps below investment grade, from B+, because an agreement with Brazil to boost its revenue share from a hydroelectric power plant has improved the country’s “fiscal flexibility.”
Bond Risk
The cost of protecting Peruvian bonds against non-payment for five years fell 5 basis points, or 0.05 percentage point, to
161 yesterday, the credit-default swaps show. The default swaps were 9 basis points higher than Brazil’s, narrowing from 68 basis points in April.
S&P yesterday also lifted Paraguay’s rating to BB-, three steps below investment grade, from B+, because an agreement with Brazil to boost its revenue share from a hydroelectric power plant has improved the country’s “fiscal flexibility.”
al institution is fragile,” said Pedro Tuesta, a former Peruvian central banker who is a senior economist at 4cast Inc. in Washington. “If investors don’t come back because they are still worried about the role of the state in the economy, growth may not continue at 6, 7 percent. That’s an ongoing concern.”
Peru, sixth-largest economy in Latin America, is still rated one step below Brazil at Fitch Ratings and Moody’s Investors Service.
Peru’s local bonds tumbled on June 6 and stocks lost a record 12.5 percent as Humala’s victory in a run-off election raised concern that the ex-military rebel will boost government control of natural resources and increase mining royalties.
Bonds have since recovered as Humala pledged in his inaugural speech on July 28 to maintain existing policies that will encourage private investment in mining and oil and gas projects. Yields on benchmark 2020 notes fell to 5.67 percent yesterday, the lowest level since November, from 6.9 percent on June 6.
“The government’s commitment to economic stability and a positive investment climate supports the ratings on Peru,” S&P said. “We believe that these factors likely will underpin solid growth through 2013 despite global uncertainties.”
Bond Risk
The cost of protecting Peruvian bonds against non-payment for five years fell 5 basis points, or 0.05 percentage point, to
161 yesterday, the credit-default swaps show. The default swaps were 9 basis points higher than Brazil’s, narrowing from 68 basis points in April.
S&P yesterday also lifted Paraguay’s rating to BB-, three steps below investment grade, from B+, because an agreement with Brazil to boost its revenue share from a hydroelectric power plant has improved the country’s “fiscal flexibility.”