Fitch Ratings downgraded Brazil's sovereign credit rating on Thursday from BB+ to BB and maintained a negative outlook, citing a highly challenging political environment in the Latin American biggest economy.
The rating agency explained that the cut reflected a deeper-than-expected economic contraction, the government's failure to restore public finances and continued uncertainty of the country's political future. It was the second time that Fitch cut Brazil's credit rating in less than six months.
At the end of 2015, the agency lowered Brazil's rating from BBB- to BB+, stripping the country of its investment grade.
The other two credit rating agencies, Standard & Poor's and Moody's, have also stripped Brazil of its investment grade. "Short-term growth perspectives have continued to weaken despite the lowering of Brazil to BB+ in December 2015.
The agency now predicts growth of -3.8 percent in 2016 and 0.5 percent for 2017, down from predictions in December of -2.5 percent and 1.2 percent, respectively," Fitch said.
Brazil is facing its worst economic recession in a century as a widening corruption investigation has prevented Congress from approving measures to revive growth.
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