MercoPress. South Atlantic News Agency

A decade later S&P lifts Uruguay’s rating to investment grade

Minister Fernando Lorenzo promises continuity of the current economic policy

Uruguay’s credit rating was raised one level by Standard & Poor’s, which means the country has returned to investment grade for the first time in a decade.

S&P announced on Tuesday it had lifted Uruguay’s rating to BBB-, the lowest investment grade and in line with Colombia. The outlook is stable. Fitch Ratings and Moody’s Investors Service rate the country one level below investment grade.

“The upgrade is based on Uruguay’s sound economic growth prospects and improving external and fiscal indicators, as foreign direct investment strengthens and improves economic diversification,” Buenos Aires-based analyst Sebastian Briozzo said in a statement.

“Prudent economic policies in recent years, backed by a broad political consensus, have allowed Uruguay to grow rapidly and reduce its main credit vulnerabilities.”

The country lost its investment grade rating in 2002 after neighbouring Argentina defaulted on 95 billion dollars of debt, sparking a run on bank deposits and currency devaluation in Uruguay.

S&P rates Argentina B, five levels below investment grade.

Economy Minister Fernando Lorenzo said the investment grade rating “will allow the country to better manage our liabilities.”

“We will continue to reduce vulnerabilities and ensure continuity of economic growth,” Lorenzo said in statements broadcast on national television in Montevideo.

The Uruguayan peso strengthened 0.1 percent to 19.5017 per U.S. dollar in trading today. The currency has gained 2.3% against the dollar this year.

“From a financial standpoint, we don’t expect significant changes as the market had already internalized this, as reflected in the rates of Uruguayan debt,” Vice President Danilo Astori said in a phone interview in Montevideo.

The upgrade was “long overdue” and will help Uruguay gain exposure among international investors, added Astori.