precatorio

New York, September 22, 2009 — Moody’s Investors Service has upgraded Brazil’s foreign- and local-currency government bond ratings to Baa3 from speculative-grade Ba1. The outlook on the new ratings is positive.

“The upgrade reflects Moodys recognition that the country’s shock absorption capacity, including the authorities’ policy response capability, points to a material improvement in Brazil’s sovereign credit profile,” said Mauro Leos, Moody’s regional credit officer for Latin America. (more…)

July 6 (Bloomberg) — Brazil’s credit ratings were put on review for an increase to investment grade by Moody’s Investors Service, which cited the country’s “demonstrated resilience to shocks” in the global economy. Bonds gained and stocks and the currency pared losses.

Moody’s placed both the country’s foreign and local ratings of Ba1, or one level below investment grade, on review for upgrade. Moody’s is the only one of the three major rating companies that has Brazil below investment grade. Both Standard & Poor’s and Fitch Ratings raised Brazil to BBB-, the lowest investment grade rating, last year. […more]

May 14, 2009 Austin Credit Rating Agency has changed the outlook on a series of Precatório FIDC’s from Stable to NEGATIVE due to the possible negative impact of the PEC 12/06 as currently drafted. Of special concern to Austin is the Brazilian institutional investment framework which has a good track record, but that now, through this Constitutional Amendment Proposal, legislates several changes to Creditor Rights, including reduction of interest rate and change of payment rules for precatórios currently being paid.

see full report here (in Portuguese): 

Event Speakers with moderator Waldemar Jezler at the center

5/14/09 Debate in NY with the international financial community on the PEC impact on Creditor Rights and the implications for Brazil’s Image as an Investment destination.

The event in NY had more than 50 people in attendance. International investors, lawyers and rating agencies were present to understand how the PEC 12/06 is being drafted by the Brazilian Congress and the implications for their investments. It is estimated that over R$5 billion in precatórios are held by international investors.

The debate was by “invitation only” to foster an open exchange of views of the current status and prospects for the PEC 12/06.

Jaime Mercado of Simpson Thacher & Bartlett hosted the event at their offices. Flavio Brando, president of the Precatório Commission of the Brazilian Bar Association presented the current status of the Constitutional Amendment process at the Brazilian Chamber of Deputies highlighting some of the points that have already been identified as unconstitutional in the current draft and that should be amended. José Virgilio Lopes Enei, partner of Machado, Meyer Advogados, presented an overview of the Precatório market and how the current draft of the PEC 12 would affect the market. Paulo Vieira da Cunha, ex-director of the Central Bank of Brazil, contributed his experience in major public rescheduling processes of the past.

REUTERS – Tue May 12, 2009 8:36pm BST

By Walter Brandimarte

NEW YORK, May 12 (Reuters) – Fitch Ratings affirmed Brazil’s investment-grade credit ratings on Tuesday but warned that the country’s fiscal credibility will be tested by the global economic crisis.

Fitch said Brazil’s lower primary surplus target for 2009, coupled with an economic contraction and increased Treasury transfers to the national development bank, will increase a public debt burden that is already “significantly higher” than that of similarly-rated countries.

“A challenging economic environment will expose Brazil’s structurally weak public finances and test the authorities’ fiscal credibility as they grapple with a revenue shock in 2009,” Fitch analyst Shelly Shetty said in the statement.

She added, however, that the country does not face financing constraints due to the depth of domestic markets and the proven government ability to access international capital markets this year despite tough market conditions.

Fitch currently rates Brazil at BBB-minus, the lowest investment-grade level, with a stable outlook. The rating is supported by a robust external balance sheet, the country’s macroeconomic stability as well as political consensus on the thrust of macroeconomic policies, the agency said.

Constraining the ratings is the government’s heavy debt burden, currently at 60 percent of gross domestic debt, as well as its weak public finances, modest growth rates and a “glacial” pace of reforms, it added.

Brazil’s credit-worthiness could be pressured, Fitch said, by a marked deterioration of its debt composition, sustained fiscal slippage, or significant contingent liabilities potentially arising from the financial sector.

Latin American markets have become more sensitive to possible rating downgrades as the global economic crisis pressures the region’s economy, after years of bonanza.

Standard & Poor’s on Monday revised down the outlook of Mexico’s BBB-plus credit rating, saying a downgrade is possible later this year. On Tuesday, it cut the ratings of El Salvador by one notch to BB.

Fitch Ratings has a negative outlook on Mexico’s ratings since November. (Editing by Leslie Adler)