Fitch affirms Brazil at 'BB'; outlook negative
"Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Negative Outlook," Fitch Ratings announced on Friday.
Brazil's ratings are constrained by the structural weaknesses in its public finances and high government indebtedness, weak growth prospects, and weaker governance.
The country's capacity to absorb shocks is underpinned by its flexible exchange rate, robust international reserves position, a strong net sovereign external creditor position, and deep and developed domestic government debt markets.
The Negative Outlook reflects continued uncertainties around the strength and sustainability of Brazil's economic recovery, the prospects for medium-term debt stabilization given large fiscal deficits, and the progress on the legislative agenda, especially related to the social security reform.
Near-term downside risks to meeting fiscal targets include a weaker economic recovery and difficulty in cutting spending to confront potential revenue shortfalls.