Brazil likely to lose investment grade by other agencies: Reuters poll

At least one other rating agency is likely to withdraw Brazil’s investment grade this year as renewed efforts to cut a budget deficit will probably fail, a Reuters poll showed, potentially deepening the country’s economic and political crisis.

All but one of 26 economists surveyed by Reuters on Thursday expect Brazil’s rating to be cut into speculative grade by a second rating agency in coming months, following a downgrade this week by Standard & Poor’s.

Although Moody’s Investors Service and Fitch Ratings have signaled they are in no rush, economists say agencies may have no choice but to downgrade Brazil into junk soon, as a recession quickly erodes public finances.

S&P’s decision surprised economists, who expected a downgrade only in 2016.

Loss of investment grade, which was earned just seven years ago, by a second agency would force some investors to dispose of about $20 billion in Brazilian debt as they are barred from owning junk bonds, JPMorgan estimated.

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