Peru Raised to BBB+ by Fitch as Humala Draws Mine Investment

Peru’s credit rating was increased one level by Fitch Ratings, making it the highest-ranked South American country after Chile, as the government cuts debt and mining investment fuels growth.

Peru’s long-term foreign-currency rating, which applies to bonds denominated in euros and dollars, was raised to BBB+, or three levels above junk grade, from BBB, Fitch said today in a statement. The outlook is stable.

President Ollanta Humala, a retired army officer who took office in July 2011, has maintained previous governments’ “pragmatic approach” to private investment, allowing Peru to withstand slower global growth, Fitch said. His “conservative” policy making likely will allow Peru to post a fiscal surplus for a third consecutive year and cut public debt to the equivalent of 19 percent of gross domestic product from 20 percent in 2012, it said.

“Peru’s established track record of policy coherence and credibility as well as the sovereign’s fiscal and external financing flexibility underpin its strong shock absorption capacity,” the company said.

The yield on the nation’s 7.125 percent dollar bond due March 2019 dropped nine basis points, or 0.09 percentage point, to 2.64 percent at 10:38 a.m. in Lima, according to data compiled by Bloomberg. The sol depreciated 0.3 percent to 2.7640 per U.S. dollar.

Humala’s Pragmatism

During an unsuccessful 2006 presidential bid, Humala accused foreign companies of looting the country and said he would renegotiate contracts. By the 2011 election, he had toned down his rhetoric, vowing to respect contracts and keep South America’s sixth largest economy open to foreign trade and investment.

A drop in prices for copper and gold this year, the country’s biggest exports, has dimmed the outlook for private investment. The economy expanded 4.3 percent in August, the second slowest annual pace since 2010.

Slower growth prompted Humala to sign laws to reduce bureaucratic delays to mining investment and modernize the civil service. He met with investors in the U.S., Indonesia and Thailand this month as he touts a portfolio of $15 billion in infrastructure projects.

Companies plan $57 billion of mining investment in Peru, according to the Mines and Energy Ministry. Metals accounted for 56 percent of Peru’s exports in the first half of this year.

Though the pace of Peru’s expansion will slow to 5.4 percent this year, from 6.3 percent in 2012, the country continues to outperform BBB-ranked economies, such as Brazil, Panama and South Africa, Fitch said. It rates Chile A+.

“Continued pragmatism under the Humala administration and a steady progress on reforms suggests that the risk of a marked departure of economic policies has reduced,” the company said.

Standard & Poor’s raised Peru to BBB+ from BBB on Aug. 19. Moody’s Investors Service rates Peru at Baa2, two levels above junk, with a positive outlook.

To contact the reporter on this story: John Quigley in Lima at

To contact the editor responsible for this story: David Papadopoulos at

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