RiskCredit RiskBrazil’s credit rating reduced to ‘junk’ by S&P

Brazil’s credit rating reduced to ‘junk’ by S&P

Credit ratings agency Standard & Poor’s (S&P), which in April 2008 awarded Brazil an investment-grade rating, has downgraded it to ‘junk’ status in its latest assessment.

Credit ratings agency Standard & Poor’s (S&P), which in April 2008 awarded Brazil an investment-grade rating, has downgraded it to ‘junk’ status in its latest assessment.

The move, which came sooner than expected, saw S&P reduce Brazil’s rating from BBB-minus to BB-plus, indicating substantial credit risk.

S&P commented that the political challenges Brazil faces had continued to mount, weighing on the government’s ability and willingness to submit a 2016 budget to Congress that met economic targets.

“The negative outlook reflects what we believe is a greater than one-in-three likelihood of a further downgrade due to a further deterioration of Brazil’s fiscal position,” the agency said.

Brazil is the largest of the Latin America economies. President Dilma Rousseff’s government, which has introduced austerity measures in an attempt to control inflation, admitted last month that the Brazilian economy had moved into recession.

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