13/02/2017 | 2:25PM
The rating agency Standard & Poor's (S&P) kept Brazil two levels below investment grade and reaffirmed the negative outlook for the country's note, which means that the rating of the Brazilian public debt can be lowered at any time. The degree of investment represents the guarantee that the country is not at risk of defaulting on public debt.
Since February last year, Brazil has been framed two levels below this category. In a statement, S&P said that political uncertainties, social tensions, slow economic recovery, and the financial crisis in some states maintain a one-third chance of further downgrading in the coming months. "The negative outlook reflects our view that there is at least a three-fold likelihood that we can downgrade Brazil's rating further towards the end of the year," the agency said.
According to S&P, the approval of economic measures, such as the ceiling for public spending, were important, but the actions are in the initial phase. In addition, the rebalancing of public accounts can be hampered by political instability. "While the Temer government and Congress have advanced some legislation to reinforce the fiscal trajectory, considering the combination of the initial stage of the measures and the size of the adjustment needed, we expect additional evidence of progress in stabilizing the economy and reducing political uncertainty," said S&P in note.
Despite maintaining the Brazilian public debt note, S&P upgraded Petrobras' rating from B+ to BB-. With the change, the state-owned company has gone from four to three levels below investment grade. The agency cited improved management and increased liquidity (cash available) from the state company.