Economists think Brazil will get downgraded to junk in the next few years

A Catarina Saraiva – Bloomberg, 8/7/2015

From another economic recession to a juicy corruption scandal embroiling President Dilma Rousseff, Brazil has had a tough 2015. It’s now looking down the barrel of another likely event: a junk rating of its government bonds.

Latin America’s largest economy has a 70 percent chance of losing its investment grade rating in the next few years, according to the median estimate in a Bloomberg News survey of economists. Standard & Poor’s said last week it may downgrade the country’s rating and revised its outlook to negative from stable. Brazil’s bonds are currently rated BBB- which is one step away from junk.

The company cited Brazil’s political and economic challenges amid an ongoing probe into kickbacks at the country’s state-owned oil company, Petrobras, which President Rousseff chaired at the time.

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