Citing the Brazil government’s ‘effective’ response to the global financial crisis, Moody’s Investors Service on Monday placed the foreign and local currency credit ratings of the South American country on appraisal for a likely upgrade.

While May 2008 saw both Standard & Poor’s and Fitch Ratings giving Brazil the investment grade status by lifting their ratings of the country to “BBB minus,” Moody's still has Brazil's foreign currency credit rating at "Ba1" – which is one mark lower than an investment grade status. 

Moody’s has underscored that resilience to the shocks rendered by the global financial meltdown is on of the key attributes that are central to an investment-grade credit profile, and, as such, upgrades have scarce amid the downturn.

However, talking about Brazil’s singular position in terms of a justified upgrade, sovereign credit analyst Mauro Leos said: “As a result of a negative turn of events in the international arena, Brazil has experienced the equivalent of a severe stress test of major proportions in the past several months.”

Moody's opined that in spite of expectations for negative gross domestic product growth, the overall performance of the Brazilian economy surpassed initial expectations “relative to a number of other countries with similar or higher sovereign ratings.” It added that Brazil’s fiscal viewpoint and the conditions for “sustainable growth” will be evaluated before the rating upgrade is decided.