Shares of Brazilian companies trading on U.S. markets rose sharply on Wednesday after Standard & Poor's upgraded the country's benchmark credit rating to investment grade.
The Bank of New York Brazil ADR Index rose 32.48 points, or 6.1 percent, to 565.02. ADRs, or American Depositary Receipts, are securities that allow foreign companies to trade on U.S. markets.
Standard & Poor's Ratings Services upgraded Brazil's long-term foreign currency sovereign credit rating to "BBB-" from "BB+." The upgrade brings the country to investment-grade status.
Standard & Poor's credit analyst Lisa Schineller said in the statement that the upgrade reflects improvements to the country's policies and economic standing, citing its lower external debt and better growth prospects. She called the company's new rating "stable."
The credit rating is an indication of the country's ability to repay foreign debt, said Jane Eddy, Standard & Poor's managing director for Latin America, and is essentially a "benchmark" rating for foreign investors.
"This has become basically the standard by which people internationally judge how solid a credit is for investments," Eddy said in a telephone interview.
Nearly all Brazilian ADRs that trade through the Bank of New York Mellon climbed on Wednesday.
Home builder Gafisa SA surged $5.89, or 15.6 percent, to $43.55.
Air carrier Tam SA rose $2.39, or 11.3 percent, to $23.60.
Supermarket and department store operator Companhia Brasileira de Distribuicao added $3.94, or 9.5 percent, to $45.49.
Steel Maker Companhia Siderurgica Nacional added $2.24, or 5.5 percent, to $43.15.
Mining company Companhia Vale do Rio Doce climbed $2.24, or 6.1 percent, to $39.08.
Tele Norte Leste Participacoes SA advanced $1.18, or 5.4 percent, to $22.91.
The Latin American ADR index rose 20.47 points, or 4.7 percent, to 459.29 while the broader Bank of New York Composite ADR Index edged up 1.72 points to 181.96.
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