Brazil, Mexico Debt May Be Rated Same by 2010 (Update2) - Bloomberg.com

Nov. 10 (Bloomberg) -- Brazil’s credit rating probably will be raised next year while Mexico’s will be cut, giving Latin America’s two biggest economies the same risk level for the first time, said Doug Smith, chief economist for the Americas at Standard Chartered Plc.

Smith said he expects ratings companies to lift Brazilian debt one grade as its diversified trade helps pull the economy out of recession faster than most developing countries. Mexico’s rating likely will be lowered one level as a reliance on U.S. export demand and oil sales slows its recovery, he said.

“It is about who is moving in the right direction and who is maybe not moving in the right direction,” Smith said at an event in New York. The two countries sharing the same rating “is something people wouldn’t think was particularly likely five years ago, but I think this is something we should expect in the middle of next year,” he said.

Brazil won an investment-grade rating of Baa3 from Moody’s Investors Service in September, putting it one level above high- yield or junk at all three major ratings companies. Standard & Poor’s and Fitch Ratings have a negative outlook on Mexico’s BBB+ rating, the third-lowest investment-grade, amid concern declining oil production will swell the country’s budget gap.

Brazil is also benefiting from prospects investment will increase ahead of the 2014 World Cup and the 2016 Olympics in the country, as well as the oil discoveries in its offshore fields. Brazil’s pre-salt finds, which lie beneath a layer of salt under the sea bed, include the biggest oilfield discovery in the Americas since 1976. The deposits may more than double Brazil’s proven reserves in three years."

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