Not Upgrading Sovereign Ratings

The decision by Standard & Poor's to upgrade Peru's long-term external sovereign debt rating to BBB on August 30 implies the agency believes the country's fiscal health will improve over the next few years, a view which we do not share. Yes, we agree with S&P's assessment that monetary policy continuity is a positive, in line with our view that investor concerns about recently-elected President Ollanta Humala's policy trajectory were overblown, and based on prior performance Peru's fiscal management over the past few years has been second only to Chile in the Latin American region.

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