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By Aluisio Alves
SAO PAULO, Sept 28 (Reuters) - A director at Fitch Ratings on Monday played down the possibility of Brazil losing its investment-grade status during its next rating revision, saying the ratings agency "does not usually" give two-notch downgrades, barring exceptional cases.
However, Rafael Guedes, Fitch's managing director for Brazil, said the possibility of an imminent one-notch downgrade is higher than 50 percent. He also noted that in 2002 the agency downgraded Brazil twice in the same year.
Fitch rates Brazil at BBB, two notches above junk, with a negative outlook. Competing ratings firms have already downgraded Brazil this year - Standard & Poor's to BB-plus, in junk territory; and Moody's Investors Service to Baa3, its lowest investment-grade rating.
Investors and even the Brazilian government expect Fitch to catch up with its peers, but the main question has been whether or not it will keep the country's coveted investment grade.
A second downgrade to junk status is expected to have an even greater market impact than the first, as many investors are required to hold securities with investment-grade ratings from at least two ratings agencies.
Fitch representatives met with Brazilian policymakers last week in Brasilia and a decision on the country's rating could come at any moment. Fitch has kept a negative outlook on Brazil's ratings since April.
Guedes said Fitch's decision will take into account the likelihood of President Dilma Rousseff getting Congress to pass the austerity measures needed to plug next year's budget gap.
"The measures are not difficult to approve, but the government has no support in Congress," he said in an event in Sao Paulo.
Guedes said that Brazil's debt dynamics will not stabilize even if the government delivers a primary budget surplus of 0.7 percent of gross domestic product and the economy grows 1 percent next year. The Brazilian economy is expected to contract 1 percent in 2016.
Reporting by Aluisio Alves; Writing by Walter Brandimarte; Editing by Richard Chang