By Elzio Barreto

SAO PAULO, April 30 (Reuters) - Brazil won a much coveted investment-grade credit rating for the first time on Wednesday, triggering a surge in local markets and heralding a new era of investment in one of the world's top emerging economies.

Standard & Poor's upgraded Brazil's credit rating one notch to "BBB-", praising its debt reduction efforts, prudent spending and growth prospects.

The upgrade of Brazil's sovereign credit rating one notch to "BBB-" fulfilled one of President Luiz Inacio Lula da Silva's most treasured goals for the country. S&P also became the first major credit ratings agency to give investment-grade status to Latin America's largest economy.

"Brazil entered the club of the most respected countries -- considered serious and with solid economies," Finance Minister Guido Mantega said at a news conference.

Analysts expect Brazil's stocks, bonds and currency to rise further in the weeks ahead as the upgrade increases the pool of potential investors who can buy the securities. Many pension funds and institutional investors are barred from putting money into non-investment grade securities.

"It is deserved. It certainly has a credit quality and has improved tremendously over the last two, three years," said Alberto Ramos, senior Latin America economist at Goldman Sachs in New York.

Brazil, which along with Russia, India and China, is one of the world's fastest-growing emerging market economies, has seen a surge in capital inflows as investors bet the country will benefit from low unemployment and a credit expansion. An agricultural and mining export powerhouse, Brazil has prospered in recent years amid booming global demand for commodities ranging from soybeans to iron ore.

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