S&P upgrades Paraguay

Standard & Poor's said it raised the long-term foreign- and local-currency ratings on the Republic of Paraguay to BB- from B+ and affirmed its B short-term foreign- and local-currency ratings.

The outlook is stable.

"The upgrade reflects improvements to external and fiscal flexibility provided by the recently enacted agreement with the Brazilian government to raise Paraguay's share of revenues from the Itaípu Dam, a hydroelectric power plant on the Paraná River near the Brazil-Paraguay border," S&P analyst Richard Francis said in a statement.

Paraguay's weak political institutions, less developed economy and limited monetary flexibility constrain the ratings, the agency said.

Strengthened economic fundamentals and the country's political maturation support the ratings, the agency noted.

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