Rousseff Losing Bond Investors as Downgrade to Junk Looms

The stagnant Brazilian economy and soaring inflation that almost cost President Dilma Rousseff her re-election bid yesterday haven’t pleased bondholders.

The country underperformed developing-nation peers in both local and foreign debt markets during her first four years. Her second term may even bring worse returns as concern mounts that Brazil could lose its investment-grade rating after Standard & Poor’s cut the country to one level above junk in March. Quantitas Gestao de Recursos, a Porto Alegre-based investment boutique that manages 15 billion reais ($5.9 billion), estimated last week there is a 50 percent chance Brazil could be cut to junk in her second term.