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Brazil Ratings Put Under Review for Cut to Junk by Moody's

  • Brazil currently rated Baa3, lowest level of investment grade
  • S&P had already cut the country's rating to junk in September
Updated on

Brazil’s sovereign rating was put on review for a cut to junk by Moody’s Investors Service as the economy worsens and the government struggles to push through measures that would shore up the budget.

A turnaround in Brazil’s economic and fiscal performance "now appears unlikely in 2016," Moody’s said in a statement Wednesday. Because of internal rules, some institutional investors such as pension funds can’t invest in securities labeled junk by at least two of the major rating companies, so a reduction by Moody’s after Standard & Poor’s cut its classification to sub-investment-grade in September could lead to a selloff in Brazilian assets. Fitch Ratings has the country at the lowest level of investment grade.