Brazil’s downgrade to continue in 2016 – Deutsche Bank

By FXStreet FXStreet (Córdoba) – Yesterday Fitch downgraded Brazil credit rating by one notch, still above the “investment grade”. According to the Research Team at Deutsche Bank the country will lose the investment grade either from Fitch or Moody’s in 2016.

Key Quotes:

“The Fitch downgrade was not a surprise, as its Brazil rating was one notch above Moody’s and two notches above Standard & Poor’s, although we believe the continuation of the Negative outlook came in on the bearish side of expectations.”

“We nevertheless believe that, because of the country’s political stalemate and fiscal quagmire, at least one agency will follow S&P and cut Brazil’s rating below investment grade in 1H16.”

“In addition, we do not believe the Fitch downgrade will significantly improve Congress’ willingness to pass the government’s fiscal package (which includes the CPMF tax on financial transaction). We retain our underweight recommendation on Brazil credit at this point.”
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Source:: FX Street