Both Moody’s Investors Service and Fitch Ratings on Friday informed clients that recent political developments put Brazil at risk of a sovereign credit rating downgrade. The two companies issued statements Friday re-affirming current Brazil ratings but stating that the risk of a downgrade has risen. Moody’s rates Brazil at Ba2, with a stable outlook, while Fitch’s rating is BB, with a negative outlook. Both ratings are two notches below investment grade. Brazil’s political landscape was altered earlier this week when allegations were aired of possible bribery and other corrupt practices involving President Michel Temer. According to the ratings agencies, the new political situation will likely impede the progress of fiscal reforms seen as necessary to curb rising levels of national debt.
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