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Moody’s downgrades Brazil’s rating but remains investment grade

Increases in interest rates (the interest rate benchmark, or Selic Rate reaches 14.25% this July), political crisis related to the operation “lava-jato” and Petrobras or the latest GDP growth forecasts (-2% for 2015) have caused Moody’s downgrade of Brazil’s credit rating to Baa3 level this August, which means that Brazil would be on the bottom rung of investment grade.

According to Moody’s “the thinner than expected economic performance, the upward trend in government spending and the lack of political consensus on fiscal reforms prevent the authorities achieve a primary surplus high enough to contain and reverse the increase in debt this year and next.”

Despite this reduction, the improvement in the outlook for Brazil’s debt rating has softened the reactions of investors.

According to local economists, the situation has been less bad than expected, as the investment rate has not been lost. The outlook is now stable, which gives time to improve the economic performance of the country and maintain investor credibility.

2017-09-18T13:28:10+00:00 14/09/2015|Latest news|