BOGOTA, July 28 (Reuters) - Ratings agency Moody's Investors Service raised its rating on Colombia's sovereign debt a notch higher to Baa2 from Baa3 with a stable outlook on improved growth prospects and a steady budget deficit despite unfavorable external conditions.
Reuters reported on July 9 in an interview with Colombia's director for public credit, Michel Janna, that the Andean nation's government was expecting an imminent increase, though it had hoped for a two-notch rise to Baa1.
Colombia regained its investment-grade rating back in 2011 a decade after losing it. An improvement in security over the last 10 years helped boost economic growth and attract record foreign investment.
A higher rating from the agency, which has never previously given the country such a high grade, is likely to lead to lower borrowing costs for Colombia.
Finance Minister Mauricio Cardenas welcomed the upgrade.
"This is excellent news for the country ... These better financing conditions translate simultaneously into lower interest rates for all Colombian companies and families," he said in a statement.
Colombia has sustained economic growth level above four percent every year since 2010 and the Finance Ministry expects expansion of around 4.7 percent this year. Inflation is still low but has risen to around 3 percent in recent months, the center point of the central bank's 2-4 percent target range. (Reporting by Monica Garcia; Writing by Peter Murphy; Editing by Diane Craft)