Moody’s keeps Brazil’s rating at Ba2 with stable outlook

Ratings agency Moody’s maintained its Ba2 rating of Brazil’s sovereign debt on Tuesday, also keeping a “stable” outlook for the country’s economy. The decision is a vote of confidence for recent changes to fiscal and monetary policy frameworks, which, according to Moody’s “will support economic performance and fiscal consolidation in the coming years.”

In a statement, the agency also mentioned Brazil’s strong foreign exchange reserves as supporting the country’s credit profile. The Ba2 rating is two notches into junk territory. Brazil lost its investment grade from Moody’s in 2016, as the country battled what was at the time the deepest economic downturn on record (that is, until the pandemic).

“Moody’s expects growth to decelerate markedly in 2022 due to tightening financial conditions and weaker consumption as high inflation erodes purchasing power,” the agency said. “In addition, relatively subdued investor confidence ahead of the presidential elections is weighing on near-term investment decisions.”

Still, Moody’s considers that a rebound in private investment last year, as well as commitments for infrastructure projects, will have positive effects in the medium term.

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