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Brazil Gets Second Junk Rating as Fitch Cites Economic Slump

  • Fitch cites recession, adverse fiscal conditions for move
  • Cut could lead to selloff of Brazilian assets globally
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Brazil's Credit Rating Cut to Junk by Fitch

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Brazil’s credit rating was cut to junk by Fitch Ratings, which became the second major ratings company to strip the country of its investment grade as Latin America’s largest economy heads to its longest recession since the Great Depression amid political turmoil.

The outlook for the rating is negative, meaning more downgrades may be coming, Fitch said in a statement Wednesday as it lowered the grade one step to BB+. Brazil’s real extended declines, the country’s overseas bonds tumbled and interest-rate swaps soared on expectations for higher borrowing costs.