Brazilian President Dilma Rousseff called an emergency cabinet meeting Thursday after a sovereign-debt downgrade sent the real reeling and left the government scrambling to address the nation’s fast-deteriorating economy.
Ratings firm Standard & Poor’s cut Brazil’s debt rating to junk-grade BB+ in a surprise move late Wednesday that highlighted mounting political challenges to the government’s efforts to correct a widening deficit. S&P maintained a negative outlook on the rating, indicating at least a one-in-three chance of another downgrade.
The move sent Brazil’s currency to its weakest level against the dollar since late 2002 in early trading, prompting an intervention by the Central Bank of Brazil; a selloff in Brazilian bonds and heavy losses in shares of state-controlled companies including oil giant Petróleo Brasileiro SA, known as Petrobras. Analysts said that a downgrade had been partly built into Brazilian asset prices but that the timing—barely six weeks after S&P put Brazil’s rating on negative watch—rang the alarm bells.
Brazil Energy Insight 
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