S&P lowers credit rating and Brazil loses investment-grade rating
With the reduction, Brazil loses its investment-grade rating
Standard & Poor's rating agency announced on Wednesday (Sep. 9) that lowered Brazil's credit rating from BBB- to BB+, with negative outlook, which means that there is chance of a new downward revision in the future. With this reduction, Brazil loses its investment-grade rating granted to countries considered good payers and safe to invest.
In a statement, the agency says that Brazil's credit profile has weakened since July 28, when there was a revision of the country's outlook to negative score, but the investment-grade rating remained the same.
The S&P signals that the country's budget proposal for 2016 forecasting a primary deficit of $8.36 billion, rather than the previously revised 0.7% of GDP surplus have influenced the downgrade decision.
For the agency, the budget proposal with a deficit "reflects internal disagreement about the composition and magnitude of measures needed to redress the slippage in public finances." The statement also mentions the relationship between Finance Minister Joaquim Levy and President Dilma Rousseff.
"While the Ministry of Finance is working on putting forward various measures to regain the 0.7% of GDP initial surplus target, they will need to be negotiated piecemeal with Congress. More importantly, the series of events leading to the budget proposal [with deficit] suggests to us diminished cohesion within President Rousseff's cabinet and contributes to our assessment of a weaker credit profile," reads the note.
In addition to S&P's revision of the country's credit rating negative outlook at the end of July, Fitch had done the same in April. Moody's, in its turn, also downgraded the country in August. The agency reduced the Brazilian rating from Baa2 to Baa3, which still keeps its investment grade.
Translated by Amarílis Anchieta
Fonte: S&P lowers credit rating and Brazil loses investment-grade rating
