Tags: brazil | moodys | downgrade | outlook

Brazil Downgraded to Junk by Moody's With Negative Outlook

Brazil Downgraded to Junk by Moody's With Negative Outlook
(Dollar Photo Club)

Wednesday, 24 February 2016 08:05 AM

Brazil’s sovereign rating was cut to junk by Moody’s Investors Service, the last of the major ratings companies to strip the country of its investment grade as President Dilma Rousseff struggles to shore up fiscal accounts amid deepening political turmoil.

The country’s rating was reduced by two steps to Ba2, Moody’s said in a statement Wednesday. The outlook for the rating is negative, meaning more downgrades may be coming.

Brazil’s credit metrics have deteriorated "materially" in the past few months and are expected to continue to worsen over the next three years, according to the ratings company, which also cited the negative impact of political gridlock on the government’s efforts to close a budget deficit and undertake structural reforms. The cut adds pressure on Rousseff, who is struggling to gain support in Congress to pass measures to raise taxes and reduce spending as she fights off efforts to impeach her.

"Macroeconomic and fiscal developments over the next two to three years are expected to produce a materially weaker credit profile," Moody’s said. "The negative outlook contemplates the risks of further deterioration to Brazil’s credit profile emanating from macroeconomic shocks, deeper political dysfunction or the need to support government-related entities."

On Tuesday, Brazil’s Congress approved a watered-down version of a bill to increase taxes on capital gains, a measure that was part of the government strategy to boost revenue and narrow a record budget deficit.

Standard & Poor’s had cut the country to the equivalent level in September, three months before Fitch lowered Brazil’s sovereign to junk. S&P downgraded the country again this month.


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Brazil's sovereign rating was cut to junk by Moody's Investors Service, the last of the major ratings companies to strip the country of its investment grade as President Dilma Rousseff struggles to shore up fiscal accounts amid deepening political turmoil.The country's...
brazil, moodys, downgrade, outlook
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2016-05-24
Wednesday, 24 February 2016 08:05 AM
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