BRAZIL: Moody’s Downgrades Brazil’s Issuer and Bond Ratings to Ba2 with a Negative Outlook

Thursday February 25 2016

On 24^th February 2016, Moody`s Investors Service downgraded Brazil`s issuer and bond ratings to Ba2 and changed the outlook to negative.

The downgrade was driven by:

• The prospect of further deterioration in Brazil`s debt metrics in a low growth environment, with the government`s debt likely to exceed 80% of GDP within three years; and
• The challenging political dynamics, which will continue to complicate the authorities` fiscal consolidation efforts and delay structural reforms.

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.

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