Paraguay’s credit rating was raised by Standard & Poor’s, which said steps the government is taking to bolster investment will fuel economic growth.
The rating was increased one level to BB, two steps below investment grade, with a stable outlook, S&P said in a statement today. The move puts Paraguay’s classification in line with Hungary and Bolivia and one level above Vietnam.
After taking office last year, President Horacio Cartes said he would seek to increase infrastructure and agriculture investments in one of Latin America’s poorest countries. The South American nation’s $28.3 billion economy will expand 4.5 percent to 4.8 percent annually in the next three years, after a 13.6 percent jump last year, according to S&P.
“The Administration will be able to maintain political consensus for its growth strategy and progress on the implementation over the coming three years, setting the stage for gradual economic diversification and reduced economic volatility,” Sebastian Briozzo, an analyst at S&P, wrote in the statement.
The extra yield investors demand to own the country’s dollar bonds instead of U.S. Treasuries was unchanged at 1.79 percentage point as of 3:10 p.m. in New York, according to JPMorgan Chase & Co. indexes.