Blow for Michel Temer as S&P Cuts Brazil Credit Rating

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Standard & Poor’s downgraded Brazil’s credit rating deeper into junk territory on Thursday, citing the government’s failure to pass key fiscal reforms, the Financial Times reported. The move by the rating agency is a slap in the face for the administration of President Michel Temer, which has been touting Brazil’s progress in recovering from its worst recession on record. The stock market has also been hitting new records. S&P cut its rating for Latin America’s biggest economy to BB- from BB amid concern over its pension deficit. “Passage of legislation to structurally reduce the fiscal deficit remains elusive, creating difficult conditions for the next administration, given Brazil’s high and rising government debt,” S&P sovereign analysts Lisa Schineller and Joydeep Mukherji wrote in a note. Brazil’s centre-right government is keen to paint a picture of an economy that is growing again after two years of deep recession ahead of elections in October that are expected to be among the most unpredictable in memory. Read more. (Subscription required.)