LIMA, Peru (AP) – Canadian debt rating agency DBRS said Friday that it has assigned investment-grade credit ratings to Peru’s long-term foreign and local currency debt.

DBRS said it is the first rating agency to give Peru investment-grade rating, an indication it feels the country’s debt is now a safe bet for even the most conservative investors, such as pension funds.

‘This reflects the position Peru has placed itself in over the last five years, with very strong fiscal accounts, very good, sound monetary policies, low inflation and the debt burden is well within the investment grade category,’ David Roberts, chief economist for DBRS, said in a telephone interview from New York City.

Standard & Poor’s rating on Peru’s long-term foreign currency sovereign credit is a double-B-plus, one step below investment grade. Peru is also rated double-B-plus by Fitch Ratings.

Moody’s Investors Service has Peru’s foreign-currency bond rating at Ba2, two steps below investment grade.

If the major U.S. agencies follow the lead of DBRS, Peru could see its borrowing costs drop significantly because it could issue debt paying lower interest rates, reflecting investors’ reduced risks.

Toronto-based DBRS said despite its progress, Peru faced challenges that ‘if inadequately addressed, could weigh against its creditworthiness. Most importantly, while poverty and inequality have shown some improvement, social development has not kept pace with the overall rise in economic growth.’

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.