Fitch downgrades and Brazil loses investment rating
Fitch Ratings credit agency has cut Brazil's investment credit rating, by lowering the country's sovereign credit rating. Brazil's grade went from BBB- to BB+. 
Fitch Ratings credit agency has cut Brazil's investment credit rating, by lowering the country's sovereign credit rating. Brazil's grade went from BBB- to BB+.
Besides the downgrade, Fitch put Brazil on negative outlook. This is the second credit rating agency to cut Brazil's investment credit rating. In September, Standard & Poor's downgraded Brazil's credit rating from BBB- to to BB+, with a negative outlook.
According to the agency, the downgrade reflects the economy's deeper recession than previously anticipated, continued adverse fiscal developments and political uncertainty that could further undermine the government's capacity to effectively implement fiscal measures to stabilize the growing debt burden.
For Fitch, increased unemployment rates, constrained credit, depressed confidence and high inflation are weighing on consumption. The agency also points out that the external environment remains difficult for Brazil with the slide in commodity prices (commodities with international prices), China's slowdown and tightening international financial conditions.
Loss of investment rating
When two agencies cut the investment credit rating, foreign funds have to cut the investment in the country. This happens because the investment credit rating assess the low or no risk of the countries to default on public debt. Below this rating, there is the speculative rating, in which the chance to fail to pay the public debt rises as the rating decreases. When a country defaults on debts, the bonds become junk. The same happens with the companies.
Fitch, Moody's, and Standard & Poor's (S&P) are the most respected agencies by the market, and they periodically analyze the countries' economies. A positive outlook allows a country and its companies to receive credit at the international market with worse or better conditions to pay interests. In addition, a high credit rating attracts foreign investors. The large foreign investment funds invest only in countries to which at least two rating agencies had granted investment credit rating.
Translated by Amarílis Anchieta
Fonte: Fitch downgrades and Brazil loses investment rating
