Paraguay Reaches Investment Grade

Photo: Unsplash

S&P Global Ratings has upgraded Paraguay’s sovereign credit rating to investment grade, granting the country its second such status among major rating agencies. The move underscores growing confidence in Paraguay’s economic framework and policy consistency.

S&P highlights policy credibility

S&P raised Paraguay’s rating by one notch to BBB- and assigned a stable outlook. The agency cited strong economic growth, a commitment to keeping budget deficits low and increasing credibility of the central bank’s monetary policy.

According to the ratings firm, Paraguay’s track record of prudent economic management has strengthened fiscal and monetary flexibility, allowing the economy to better absorb external shocks.

Foreign investment and diversification in focus

The upgrade reflects expectations that rising foreign direct investment will support Paraguay’s medium-term outlook. S&P noted that sustained capital inflows should help diversify the economy, broaden the export base and enhance resilience to global volatility.

Stable and predictable policies, the agency said, are a key factor behind growing investor confidence and improving economic fundamentals.

Bond markets respond positively

Paraguay’s dollar-denominated bonds rose across the curve following the upgrade. Notes maturing in 2033 climbed to around 88.5 cents on the dollar, according to Bloomberg pricing data, signaling reduced risk premiums and stronger demand from global investors.

Achieving a second investment-grade rating significantly expands the pool of institutional investors eligible to hold the country’s debt.

Government sees gains for economy and jobs

Finance Minister Carlos Fernandez said the rating upgrade would translate into more investment, stronger growth and job creation. He emphasized that broader access to capital markets should lead to better-quality employment and tangible benefits for the population.

Alignment among rating agencies

With S&P’s decision, Paraguay now holds investment-grade ratings from both S&P and Moody’s. Fitch Ratings still assesses the country at BB+ with a positive outlook, suggesting potential for further upgrades if current policy discipline is maintained.

As International Investment experts report, Paraguay’s second investment-grade rating marks a decisive shift in how global markets view the country. It lowers borrowing costs, broadens access to long-term capital and positions Paraguay as one of Latin America’s more stable and attractive destinations for sustained foreign investment.