S&P lowers four regions in Brazil

Standard & Poor's said it lowered the global scale long-term foreign-currency and local-currency credit ratings on the states of Sao Paulo and Santa Catarina to BB from BB+, along with the state of Minas Gerais to BB- from BB+.

The agency also lowered the foreign-currency ratings on the city of Rio de Janeiro to BB from B, along with the local-currency ratings to BBB- from A-3.

The downgrades follow the downgrade of the sovereign ratings on Brazil.

S&P said it affirmed the BB- foreign-currency and local-currency ratings on the State of Rio de Janeiro, along with its national scale rating brA.

The agency also said it also lowered the foreign-currency rating on the City of Rio de Janeiro to BB from BBB-, along with its local-currency rating to B from A-3.

Sao Paulo’s and Santa Catarina’s national scale ratings also were lowered to brAA- from brAA+, Minas Gerais’s national scale rating was lowered to brA from brAA and the City of Rio de Janeiro’s national scale rating was lowered to brAA- from brAAA.

The outlook remains negative.

The downgrades on these local and regional governments reflect a similar action on Brazil, the agency said.

S&P said it still views the institutional framework of these governments as evolving and unbalanced.

Brazil's very difficult macroeconomic and political environment further undermines the governments’ already strained finances, which is expected to persist in the next two years.

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