MercoPress. South Atlantic News Agency

Moody’s joins S&P and lifts Colombia’ credit rating to investment grade

Security concerns have been waning, said Moody’s statement

Colombia’s credit rating was raised to investment grade by Moody’s Investors Service, matching a move by Standard & Poor’s two months earlier, as economic growth accelerates and the threat posed by guerrilla groups and organized crime recedes.

Moody’s upgraded Colombia’s rating to Baa3, which is the lowest level of investment grade from Ba1. The move puts Colombia’s rating on par with Brazil, Peru and Panama with the outlook stable. Colombia was boosted to BBB- by S&P on March 16.

“Security concerns, historically a major issue for Colombia, have not disappeared, but have been waning after several major government wins against domestic guerrilla groups,” Moody’s said in a statement accompanying its decision.

Colombia recovered its investment-grade ratings from Moody’s and S&P 11 years after it was cut to junk when insurgent violence and a banking crisis helped trigger six straight quarters of economic contraction between 1998 and 1999. Fitch Ratings rates Colombia’s foreign bonds BB+, one level below investment grade.

Colombia has cut its homicide rate by almost half since 2002, when former President Alvaro Uribe took office, and boosted investor confidence by cutting debt levels, maintaining stable inflation and increasing economic growth.

The nation grew at its fastest pace in three decades in 2007 and attracted a record 10.6 billion US dollars in foreign direct investment in 2008. The government expects the economy to grow as much as 6% this year, while forecasting foreign direct investment to reach 8 billion USD this year.

Hernando Jose Gomez, the head of Colombia’s National Planning Department, told reporters today that the upgrade will likely help foreign direct investment rise to 14 billion by 2014.