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Fitch Ratings cut Brazil’s sovereign credit rating to junk status on Wednesday, citing the country’s ballooning budget deficit, political turmoil and a deeper than expected recession.
The decision deals a fresh blow to President Dilma Rousseff as she struggles to revive the economy and avoid impeachment. Fitch becomes the second major credit rating firm to downgrade Brazil to junk, a move that could trigger a selloff of Brazilian financial assets and make it more expensive for the government to borrow. Analysts estimate the net outflow from Brazilian assets could reach $1.6 billion.
The downgrade, the second this year from Fitch, left Brazil’s rating one notch into junk territory at BB+ with a negative outlook.
The original article can be found at wsj.com