News Alert: Brazil Government Debt Upgraded

According to news sources (which have not hit the major newswires as of the time of this posting which is 3:06 PM), Brazil's government debt has been upgraded. This had been expected in the second half of this year. So, this announcement caught investors off guard and pleasantly surprised.

By raising the rating to investment grade, Brazil's cost of capital will almost certainly decline. Additionally, the upgrade opens the door for more capital that is restricted to investment grade only.

Recently, news re the large oil fields off the Sao Paulo coast of Brazil had stimulated much investor excitement. This excitement was tempered with comments re questions as to the size of the fields (as high as 40 billion barrels - Tupi and Sugarloaf/Carioca fields combined) and the complexity extracting the oil (up to six miles deep, among other factors).

Investment Strategy Implications

One of the investment positions in the Model Growth Portfolio* is ILF - Latin America 40, which is comprised predominantly of Brazilian issues, some Mexican issues (mostly energy), and a smattering of other Latin American companies.

More on this story as details become better known.

*see performance chart to your left.
Note: Accounts managed by Blue Marble Research hold positions in ILF and EWZ (Brazil ETF). Neither Vinny Catalano nor any member of his family hold positions ILF or EWZ.