Moody's cuts Brazil credit rat­ing to junk

The Pak Banker - - COMPANIES/BOSS -

Moody's be­came the third big agency to cut Brazil's credit rat­ing to junk Wed­nes­day, cit­ing mount­ing debt and political in­sta­bil­ity in Latin Amer­ica's big­gest coun­try. Cut­ting the credit rat­ing by two notches to Ba2, Moody's said Brazil suf­fered a "low growth en­vi­ron­ment," wors­en­ing debt, and "chal­leng­ing political dy­nam­ics." Junk sta­tus had al­ready been given by Fitch and S&P. Moody's also said that it was giv­ing the sev­enth big­gest econ­omy in the world a neg­a­tive out­look, pos­si­bly herald­ing fur­ther down­grades. "The neg­a­tive out­look re­flects the view that risks are skewed to­ward an even slower con­sol­i­da­tion and re­cov­ery, or fur­ther shocks emerg­ing, which creates un­cer­tainty over the mag­ni­tude of de­te­ri­o­ra­tion of Brazil's debt pro­file over the rat­ing hori­zon," Moody's said.

Brazil is in deep re­ces­sion af­ter years of growth led by high prices and strong Chi­nese de­mand for its oil, iron ore, soya and other com­modi­ties - a boom that is now firmly over. In ad­di­tion, Brazil is crip­pled po­lit­i­cally by grid­lock in Congress and a pro­tracted bat­tle to im­peach Pres­i­dent Dilma Rouss­eff.

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