Brazil’s just been downgraded to junk by Standard & Poor’s. What does it really change?
Everybody knew the storm was coming, and yet many people got caught in the rain. Having sent warning signals that it was considering Brazil for a downgrade, Standard & Poor’s enacted on its threat sooner than expected by cutting Brasilia’s rating to junk on Wednesday. It also put the country on negative watch, in a double whammy of bad news few had anticipated.
Moody’s and Fitch, meanwhile, kept their ratings unchanged. And there are signs that the latter at least has no immediate intention to strip Brazil of its investment grade. Given that the votes of two out of the three agencies are conventionally needed to push a country into junk territory, does S&P’s decision really matter?Read More