Brazil Rating Outlook ‘Difficult to Support,’ Moody’s Leos Says

Lackluster growth and rising debt levels are making it “more difficult to support” the positive outlook on Brazil’s credit rating, according to Mauro Leos, senior credit officer at Moody’s Investors Service.

“Questions about growth and the trend of the debt ratios are ones that are leading us to question whether a positive outlook can still be supported,” Leos said in a telephone interview from New York. “Perception about Brazil has started to turn negative. This is complicating matters more.”

Moody’s will decide in the second half of 2013 whether to change the outlook on Brazil’s Baa2 rating, Leos said. The rating itself, two levels above junk, is “well-positioned,” he said. Standard & Poor’s cut the outlook on its equivalent BBB rating to negative from stable on June 6.

Latin America’s largest economy is forecast by analysts surveyed by the central bank to grow less than 3 percent for a third consecutive year in 2013. Structural problems include high labor costs and low investment, Leos said.

Brazil’s ratio of debt to gross domestic product is almost 60 percent, compared with less than 40 percent for Mexico, Turkey and India, Leos said.

To contact the reporter on this story: Gabrielle Coppola in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at

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