Fitch Ratings decided to keep Brazil investment grade, but the outlook for the credit watchdog has turned negative. Fitch downgraded Brazil’s long-term foreign credit rating to BBB- from BBB on Thursday, placing it one notch above junk bond status.
Standard & Poor’s cut Brazil’s credit rating to speculative grade earlier this year.
Fitch said that rating downgrade reflects Brazil’s rising government debt burden, increased challenges to fiscal consolidation and a worsening economic growth backdrop. The difficult political environment is hampering progress on the government’s legislative agenda and creating a negative feedback loop for the broader economy.