Paraguay Credit Ratings Upgraded by Moody’s (Update1)

Bolivia, Paraguay Credit Ratings Upgraded by Moody’s (Update1)
By Andrea Jaramillo – December 2, 2010 18:15 EST

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Business Exchange Buzz up! Digg Print Email .Dec. 2 (Bloomberg) — Moody’s Investors Service raised Bolivia and Paraguay’s foreign and local currency credit ratings, citing improved fiscal situations in both countries.

Moody’s raised Bolivia’s credit rating to B1, or four levels below investment grade, from B2. Paraguay’s credit rating was increased to B1 from B3.

“A combination of debt forgiveness and recent years of fiscal surpluses led to a drop in Bolivia’s main debt indicators,” Moody’s said in a statement. The ratio of government debt to revenue will be below 120 percent this year after peaking at 350 percent in 2003, Moody’s said.

Both countries are benefiting from demand for their commodity exports, Moody’s said. Bolivia has the second-largest natural gas reserves on the continent, while Paraguay is an exporter of soybeans. The Dow Jones-UBS Commodity Index of 19 raw materials has gained 9.1 percent this year.

Bolivia’s rating has a positive outlook. Moody’s also cited the country’s “reduced domestic political turmoil in the aftermath of last year’s constitutional reforms and presidential re-election” as a reason for the upgrade.

Paraguay, which has a stable outlook, benefitted from improved growth prospects amid higher commodity prices and increasing economic ties to Brazil, Moody’s analyst Patrick Esteruelas said in a statement.

The economy will grow about 9 percent this year, among the highest growth rates since the early 1980s, he said.

“While we expect growth in 2011 to be lower, investments in infrastructure should help trend-growth to remain close to 5 percent going forward,” he wrote.

The Paraguayan government’s debt-to-revenues ratio will be an estimated 81 percent this year “with additional reductions anticipated next year,” Esteruelas wrote.

To contact the reporters on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net;

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

http://www.bloomberg.com

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