When the Republica Oriental del Uruguay sold a 10-year bond on the international debt markets in September 1996, officials at the Banco Central were pleased to note that the 160 basis point spread was tighter than some recent offerings from investment grade-rated sovereigns, strength-ening their belief that Uruguay was ready for an upgrade.
"We decided that the market had already awarded us an investment-grade rating, but we still needed the certificate," comments Daniel Vaz, head of economic research at the Banco Central in Montevideo, and so a decision was taken to approach the rating agencies in order to better explain the Uruguayan story.
First, credit analysts from Duff & Phelps and IBCA were invited to presentations in Montevideo, and early in 1997 both came out with investment grade ratings for the country's foreign-currency debt. And in May, both Moody's and Standard & Poor's also visited Uruguay. The visit took place during the same week that officials at the central bank were meeting with lawyers to start the due diligence process on a planned $300 million global bond offering led by ING Barings.
Both S&P and Moody's subsequently conferred investment-grade ratings (of triple B minus and Baa3 respectively) on Uruguay's foreign-currency debt issues.