Fitch lifts Peru view to positive

Fitch Ratings said it revised the outlook on Peru's long-term foreign- and local-currency sovereign issuer default ratings to positive from stable and affirmed its BB+ foreign- and BBB- local-currency long-term issuer default ratings, B short-term issuer default rating, BBB- country ceiling, BB+ uncollateralized foreign-currency bonds and BBB-/RR3 collateralized Brady bonds due 2027.

The agency said Peru's creditworthiness continues to strengthen, as the combination of declining public external debt and rising international reserves has reduced the country's vulnerability to external shocks. Fitch's expectation that favorable public finance and external account trends will continue raises the likelihood of an upgrade over a horizon of two years.

Although the agency expects the current trend in export and economic diversification to continue, the diversification and financial cushion achieved thus far are not yet consistent with an investment-grade rating. Further reductions in net external debt and a broadening of exports and sources of economic growth would bode well for sovereign creditworthiness, Fitch said, as would progress on the structural reforms related to public finances or the labor market and additional evidence that political shocks will not derail current economic policies.

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