Back
16 Sep 2015
Brazil is junk according to ratings agency - Rabobank
FXStreet (Barcelona) - Analysts at Rabobank noted that On September 9th, Brazil was downgraded to BB+ with a ‘negative’ outlook by Standard & Poor’s thus Brazil lost its investment grade status and is now considered ‘junk’ by the ratings agency.
Key Quotes:
"This decision came as a consequence of fiscal slippage and rising implementation risk with respect to the current fiscal adjustment on the back of low congress support.
The trigger for the downgrade was likely the budget proposal announced on August 31st which included a BRL 30.5bn deficit (0.5% of GDP). This effectively meant that Brazil would face three consecutive years of budget deficits.
Yesterday, Fin Min Levy and Planning Min Barbosa announced a BRL 66.2bn plan aimed at returning Brazil to a primary surplus with a central government primary balance target of BRL 34.4bn. We remain skeptical as to whether this is achievable given slowing growth and high implementation risk."
Key Quotes:
"This decision came as a consequence of fiscal slippage and rising implementation risk with respect to the current fiscal adjustment on the back of low congress support.
The trigger for the downgrade was likely the budget proposal announced on August 31st which included a BRL 30.5bn deficit (0.5% of GDP). This effectively meant that Brazil would face three consecutive years of budget deficits.
Yesterday, Fin Min Levy and Planning Min Barbosa announced a BRL 66.2bn plan aimed at returning Brazil to a primary surplus with a central government primary balance target of BRL 34.4bn. We remain skeptical as to whether this is achievable given slowing growth and high implementation risk."