Moody’s sees little impact on Brazil’s credit profile after Brasilia attacks

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Credit rating agency Moody’s said on Tuesday (10) that it does not expect the credit profile of Brazilian issuers, including the sovereign, to be significantly affected by recent events in Brasilia, after supporters of former President Jair Bolsonaro invaded and plundered the headquarters of the Three Powers.

“We see the emergence of political consensus that condemned the acts of violence and the determination of the authorities to quickly control the situation as a sign of institutional strength,” said in a note Samar Maziad, senior analyst of sovereign risk at Moody’s.

After supporters of former president Jair Bolsonaro invaded and destroyed the buildings of the Planalto Palace, the STF (Supreme Federal Court) and the National Congress on Sunday, the Chamber of Deputies and the Senate approved the decree that establishes federal intervention in the area. of public safety in the Federal District.

Still on the night before, President Luiz Inácio Lula da Silva, governors and ministers of the Federal Supreme Court (STF) walked together from the Planalto Palace to the headquarters of the Supreme Court the night before to inspect the damage, in a gesture to symbolize unity in the defense of democracy, while the authorities expanded the arrests of those accused of the attacks.

“While political tensions are high and polarization remains a challenge for the new government, we expect broad economic and institutional stability to prevail,” Maziad said of the implications of Sunday’s attacks.

According to her, negative credit implications may arise only if the acts of violence over the weekend persist and lead to major disturbances in economic activity that cannot be mitigated by the country’s institutions, which would add to other challenges faced by the country, such as fiscal pressures and weak growth expectations.

However, Maziad pondered, Moody’s sees “a low probability of events escalating in this way in the near term”.

Moody’s assigns a “Ba2” rating, with a stable outlook, to Brazil’s sovereign credit profile, a classification that is in the so-called speculative grade, leaving Brazil on the list of riskiest countries for investment.

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