A change Perspective of Moody’s Ratings of Credit Note in Brazil It reflects a fiscal scenario that has placed the market in a polly – and with no prospect of short -term improvement. This is what they tell experts heard by CNN This Friday (30).
For Monte Bravo’s chief strategist, Alexandre Mathias, the company is “correcting” the previous classification in a growing collection scenario, but with much larger expenses.
In May last year,, under the justification that real growth and gross domestic product (GDP) were more robust than registers in the years before Covid-19 pandemic.
In October, the expectation was reinforced ,.
This Friday, in a press release, the agency of the “positive” country to “stable” and mentioned what he called the deterioration of public accounts. Brazil continues with the BA1 grade, but now a level further from the investment degree.
“The change in the perspective to stable reflects a gradual reduction in positive credit risks, in view of marked deterioration in debt payment and slower progress than expected in facing spending rigidity and building credibility around fiscal policy,” says the report signed by Vice President Samar Maziad and the administrative director Ariane Ortiz-Bolin.
Alongside Fitch Rating and S&P, Moody’s make up the so -called “Big Three”, the three largest risk classification agencies.
For Alexandre Mathias, social programs announced by the federal government as the Vouchercreated to reduce the effect of the price of cooking gas on the budget of low -income families and with an expectation of harm the fiscal horizon.
“The government has a strategy of conducting the economy that way to the election. These care programs have not improved popularity, but the government insisted more of it,” continues Mathias.
This Friday, President Luiz Inacio Lula da Silva (PT) related the program Most Access to Experts, which was now renamed, has specialists,
The deterioration, however, was not only cited in relation to public accounts, but also expectations.
Gustavo Cruz, chief strategist at RB Investimentos, did not see the news as a novelty for those who follow the steps of the federal budget closely.
Cruz adds that, in the financial market, there is no expectation of improving the flow of public accounts – neither this year nor 2026.
“Practically when we talk between the market no one expects a very positive result of public accounts for this year or for the next,” said the expert.
For Cruz, loss of confidence may also be related to unfulfilled “promises” of spending containment.
“All that turbulence in December resulted in nothing, because we had a promise in that package-gasting package of a renovation of the military that was not delivered not even discussed,” he says. “Moody’s is not doing anything absurd, it is reporting what the government itself is delivering, which is to get away from the lower limit of the goal.”
Later this month, Finance Minister Fernando Haddad announced measures to reach the fiscal target. One of them was the freezing of R $ 31.3 billion in the general budget of the Union of 2025. The market, on the other hand, expects a
RB’s chief strategist calculates that $ 20 billion is still required to reach a lower limit than desired.
“They are counting on results from Congress in amendment of amendments, something that still seems well out of reality,” he continues.
“I believe that both the executive, judiciary and legislature have not collaborated at all for this discussion of fiscal justice.”
In assessing Moody’s perspective change, Beto Saadia, Nomos Investment Director, also sees a disarticulation between the powers.
His view is that the Brazilian debt trajectory is becoming worse and worse, which exposes an additional risk to Brazilian public debt, which advanced 1.44% in April and already exceeded the range of R $ 7.6 trillion.
Unlike Cruz, Saadia sees that Congress must resolve the issue, which would already have the support of the Ministry of Finance.
“It is not part of the Ministry of Finance to deal with this, it is part of Congress,” says Saadia.
“The urgency of a need to approve a budgetary reform that deindexes all these mandatory expenses we have and thereby puts us in a much more sustainable debt trajectory.”
Finally, José Maria da Silva, Avenue’s strategy and allocation coordinator, believes that, after the review of Moody’s, there is no “any hypothesis” that suggest the resumption of the country’s investment degree, as Haddad expected.
The reforms of structural spending reduction would have to be extensive for risk agencies to consider the movement to return to invest in Brazil, says José Maria.
“It is also important to remember that for the market to consider investment grade normally requires that at least two of the three agencies have this rating,” points out the Avenue expert.
“When Moody’s mentions the rigidity of spending as a problem is saying between lines that either there are structural reforms that change this rigidity or the blanket will always be short.”
