The ratings agency cut Brazil's sovereign credit rating to triple-B-minus from triple-B, also citing weak economic growth, and said its outlook for Brazil was stable. Brazil soared to 7.5% growth in 2010 but its economy has slowed sharply since, as the competitiveness of local manufacturers has slipped and a government effort to drive growth by stimulating consumer credit has run out of steam.
The downgrade marks a turnaround from 2008, when Brazil's bonds were awarded investment grade status amid the global financial crisis. The South American nation seemed to shrug off much of the global downturn, spurring an investor frenzy for Brazilian securities. But investor optimism soured as growth slowed and government policies designed to restart it failed to reignite the economy. The agency had warned about the possibility of a downgrade in mid-2013.