S&P takes Brazil off CreditWatch, but keeps negative outlook
Standard & Poor's took Brazil's long-term debt ratings off the chopping block after president Michel Temer survived votes in the country's electoral court and in Congress related to corruption charges.
The ratings agency took the rating on the nation's long-term sovereign debt off so-called 'CreditWatch', lifting the risk of an immediate downgrade further below the investment grade level.
However, the 'outlook' on Brazil's BB rating was kept at 'negative' to reflect that a downgrade was still possible over the next six to nine months.
According to S&P, the country's economy had also managed to stabilise despite the "fluid" political backdrop.
Indeed, Congress had passed a reform of the labour market and in S&P 's judgement the government remained committed to advancing some pension reform and "its active microeconomic reform agenda".
Nonetheless, given Brazil's high and rising debt burden, the ratings agency highlighted the risk that Brasilia might fail to promote legislation to reduce the country's "fiscal rigidities", which had hindered a sustained reduction in the public spending deficit.