For Brazil, the award last week of an investment grade credit rating, was, in the words of its President Luiz Inácio Lula da Silva, a “magic moment”. Investors seem to agree. Brazil’s markets have strengthened further in the past few days. But amid the euphoria everybody needs to keep a sense of perspective.

After all, rating agencies, such as Standard and Poor’s, simply assess the capacity of borrowers to repay debt. An investment grade makes a country’s debt more attractive to the big pension funds and insurers. It is not a badge of development.