Brazil’s Country Risk Falls to Lowest Level in Nine Years

RIO DE JANEIRO, BRAZIL – An indicator that measures the distrust of investors in a given economy, Brazil’s country risk has fallen on Monday, December 16th, to the lowest level in nine years.

Brazil’s five-year Credit Default Swap (CDS) was 100.2 points at around 5 am, but it hit 98.2 points at around 2 pm, the lowest score since November 2010 (96.9 points), when the country still had investment grade ranking – a good payer’s seal of approval.

The CDS works as an informal thermometer of the probability of a country defaulting on the global financial market in the next five years. The lower the indicator, the greater the confidence of international investors.

Through social network Twitter, the Chief Minister of the General Secretariat of the Presidency of the Republic, Jorge de Oliveira Francisco, celebrated the reduction of country risk.

“Brazil risk has reached 100 points, the lowest since 2012. In the last week we also had the historical maximum of the Stock Exchange, which closed over 112,000 points. These numbers show that Brazil has become a country increasingly conducive to job creation and investment,” he wrote.

In the last week alone, Brazil’s country risk fell 14.43 percent, especially after the rating agency Standard & Poor’s raised from stable to positive the expectation of the Brazilian public debt rating.

The reduction of the CDS of emerging countries gained momentum after the conclusion of the first phase of trade negotiations between the United States and China.

The optimism with the relief of trade tensions between the two largest economies on the planet contributed to reduce the country risk of several emerging economies.

At 5 pm, Mexico’s CDS was 73.91 points; Colombia’s was 69.79 points. Other emerging countries, however, are at higher risk than Brazil. South Africa’s CDS was 173.68 points;  meanwhile Turkey’s was 289.03 points.