Moody's upgrades Latin America outlook for 2011 suggesting possible upgrades

Moody's suggests that credit ratings for Latin American could get stronger for 2011.  This goes back to what we have said here many times, that countries that are poor and free will shine strong in the Great Money Shift as money leaves the Western high liability governments to low-debt and unfunded liability developing nations. 

Latin America is case in point with Brazil, Peru, Colombia, Chile and Mexico all stand to take advantage of the influx in new cash and economic growth. 

But, don't worry, markets aren't stupid.  Don't expect Venezuela, Ecuador or Bolivia to be on this train.  Argentina could catch on, but will have to sit in the caboose.  Via WSJ
The region is expected to keep growing at a healthy pace in 2011 on the back of strong domestic demand, supportive global growth conditions and rising commodity prices, the report said.

Moody's said an assessment of Brazil's Baa3 rating, now with a positive outlook, will likely take place during the second quarter of 2011.

Despite the risk of a fall-off in Chinese demand, Brazil "will likely continue to display above-trend economic growth as the positive momentum of recent years extends into 2011," said Moody's senior analyst Patricio Esteruelas in a statement.

The country's main challenge will be transitioning toward lower, more sustained growth, he added.

Moody's doesn't expect a downgrade for Mexico's Baa1 rating, based upon its improving economic conditions and responsible policy management.

Main sovereign credit risks for Latin America and the Caribbean as a whole include, like Brazil, decreased demand for products from China, a slow U.S. recovery and market risk aversion due to Eurozone worries.

However, the ratings agency said a declining share of foreign currency-denominated debt, accumulation of foreign-exchange reserves and efforts to lengthen debt maturities will leave Latin America better equipped to withstand market shocks.

Any upgrades will follow the region's gains in 2010, when 10 countries saw upgrades, and three others, including Brazil, were assigned positive outlooks.


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