Brazil credit risk drops to lowest in seven weeks as real gains

Filipe Pacheco – Bloomberg Business, 11/4/2015

Brazil’s sovereign risk declined to the lowest level since September amid signs investor sentiment is slowly improving and as the government moves closer to a vote in Congress that will help it boost revenue. The real advanced.

The cost of insuring Brazilian bonds for five years in the credit-default swaps market declined for the fourth straight day to 389 basis points, the lowest level since Sept. 17. The real advanced 0.4 percent to 3.7548 per dollar as of 11:22 a.m. in Sao Paulo, after falling as much as 0.3 percent earlier. It was still the worst performer among 31 major currencies tracked by Bloomberg, with a 30 percent decline.

Brazilian President Dilma Rousseff and Finance Minister Joaquim Levy are trying to push measures to strengthen government finances through Congress to avert further credit rating cuts after Standard & Poor’s downgraded Brazil’s debt to junk in September. At the same time an increase in mergers and acquisitions in Latin America biggest economy showed some buyers see value in the country’s assets.

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