S&P leaves Brazil wobbling on edge of junk
By Paul Kilby
NEW YORK, July 30 (IFR) - Struggling Brazil took another blow to the chin this week when S&P put the country's BBB- credit rating on negative outlook, setting the stage for a potential downgrade to junk.
The other agencies could soon follow S&P's lead, as the government of President Dilma Rousseff fails to get to grips with the country's deteriorating credit metrics.
A brief recovery in asset prices earlier this year has not stuck, and since a sharp downward revision of government surplus targets, investor confidence - never high - has waned.
"It is a big concern that the country will lose its investment grade over the next 12 months," Javier Murcio, a portfolio manager at Standish, told IFR.
"Brazil is a major investment for global investors, and some accounts can only invest in investment grade (credits). This will have repercussions in terms of flows."
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