Peru Rating Lifted to BBB at S&P

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By Ye Xie - Aug 30, 2011 5:38 PM ET

Peru had its foreign debt rating raised one level by Standard & Poor’s, which said it expects recently elected President Ollanta Humala to continue policies that support the country’s economic expansion.
S&P raised Peru to BBB, the second-lowest investment grade, from BBB-. The outlook is stable. S&P also lifted Paraguay’s rating to BB-, three steps below investment grade, from B+, because an agreement with Brazil to boost its revenue share from a hydroelectric power plant has improved the country’s “fiscal flexibility.”
Humala, who took office last month, has signaled “policy continuity” by reappointing “respected” central bank President Julio Velarde and picking Luis Miguel Castilla, a Harvard University-trained economist, as finance minister, S&P said.
“We expect that broad fiscal and monetary policy continuity under Peruvian President Ollanta Humala’s new government will support stronger economic policy flexibility and growth,” S&P said.
The Andean country’s economic growth averaged 7.2 percent in the past five years as policy makers tapped into a global mining boom while curbing inflation and the budget deficit.