Moody’s revises view of four Brazilian states

Moody's Investors Service said it revised the outlook of the Brazilian states of Parana (Ba3/A1.br), Bahia (Ba3/A2.br), Maranhao (Ba3/A3.br) and of the municipality of Rio de Janeiro (Ba2/Aa1.br) to stable from negative.

The agency also affirmed Parana’s Ba3 global scale local- and foreign-currency ratings and A1.br national scale local- and foreign-currency ratings.

Moody’s also affirmed Bahia’s Ba3 global scale local-currency and A2.br national scale local-currency ratings.

Maranhao’s Ba3 global scale local- and foreign-currency ratings were affirmed, along with the A3.br national scale local-currency ratings.

Rio de Janeiro’s Ba2 global scale rating was affirmed, along with its Aa1.br national scale local-currency rating.

The outlooks were revised following a similar rating action on the outlook of Brazil's government bond rating to stable from negative, Moody’s said.

The outlook revision of the Brazilian states reflect the close economic and financial linkages that exist between Brazil’s government and Brazilian sub-sovereigns governments, the agency said.

The rating action also reflects Moody's expectation that Brazilian states and municipalities will continue to focus on controlling spending and adapting their cost structure such as to allow a progressive stabilization of their fiscal balance, even in the absence of visible tax revenue growth resulting from an incipient recovery in Brazil's economic growth expected in 2017.

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