Brazil's woes deepened on Wednesday as Moody's Investors Service downgraded all ratings for embattled oil group Petrobras, and the country faced the threat of losing its investment grade credit rating from the agency.
Moody's downgraded all ratings for Petrobras to Ba3 from Ba2, and placed them on review for possible further downgrade.
"These rating actions reflect Petrobras' elevated refinancing risks in the face of deteriorating industry conditions that make it more difficult to raise cash through asset sales," the agency said.
Meanwhile, after Congress opened impeachment proceedings against President Dilma Rousseff last week, Moody's said it was placing Brazil's Baa3 rating on review for downgrade, driven by a rapidly deteriorating economy and "worsening governability". The move raises fears of an investor exodus from Latin America's biggest economy.
"Fiscal and economic activity indicators continue to sharply deteriorate with no clear sign of when they will bottom out," Moody's said. "The initiation of impeachment proceedings against the president in early December . . . leaves very little chance of tackling the worsening medium-term fiscal trends."