Political Risk Latin America Blog @PolRiskLatam

Rating Upgrades Trounce BRIC Peers as Vale, JBS Debt Raised: Brazil Credit

Posted in News and Articles, Political Risk by politicalrisklatam on November 16, 2010

by Drew Benson and Ben Bain for Bloomberg, November 16th, 2010.

Argentina’s borrowing costs relative to investment-grade Latin American countries are sinking as the nation posts the region’s fastest economic growth.

The extra yield investors demand to own Argentine dollar notes instead of debt from Brazil, Peru and Mexico shrank to 395 basis points from 581 at the beginning of the year, according to JPMorgan Chase & Co.’s EMBI Global index. The gap may narrow to 250 basis points, or 2.5 percentage points, by 2012, according to RBC Capital Markets.

The central bank forecasts Argentina’s economy will grow 9 percent this year, compared with expansions of 7.3 percent in Brazil, 8 percent in Peru and 5 percent in Mexico. Argentina had a budget surplus equal to 0.2 percent of gross domestic product in the 12 months through September, according to Morgan Stanley. Brazil had a deficit of 2.6 percent and Mexico’s gap was 2.4 percent. Standard & Poor’s rates Argentina B, seven steps below Mexico and six levels lower than Brazil and Peru.(continue reading… )



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