BRAZIL: Moody`s Places Brazil`s Baa3 Issuer and Bond Ratings on Review for Downgrade

Friday December 11 2015

Moody`s Investors Service has placed Brazil`s Baa3 issuer and bond ratings on review for downgrade. The review for downgrade is driven by i) rapidly and materially deteriorating macroeconomic and fiscal trends and diminished likelihood of trend reversal in the next 2-3 years; and ii) worsening governability conditions and increased risk of policy paralysis. During the review, Moody`s will assess the likelihood of further deterioration in the government`s fiscal position against the agency`s baseline assumptions supporting the current Baa3 rating, and the prospect of a faster and more significant rise in the government`s debt trajectory, in the context of heightened political uncertainty, declining investor confidence and deeper than expected recession.

Additionally, Moody’s has placed on review for downgrade the deposit and foreign currency debt ratings as well as counterparty risk assessments assigned to 17 Brazilian banks, and their respective offshore branches and local currency issuer and foreign currency debt ratings assigned to 2 other financial institutions, which followed the announcement of the review for downgrade on Brazil`s government bond rating of Baa3. Included in the review for downgrade ratings is BM&FBovespa.

The last rating action on BM&FBovespa S.A. was on August 12, 2015, when Moody`s downgraded both its local issuer and foreign currency senior unsecured debt ratings to Baa2, from Baa1. The action followed the downgrade of Brazil`s debt rating to Baa3. The outlook on BM&FBovespa`s ratings changed to stable, from negative in line with the stable outlook on the sovereign debt rating.

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