Moody's lowers Sao Paulo view to negative

Moody's Investors Service said it revised the outlook of the Brazilian state of Sao Paulo to negative from stable.

The agency also affirmed Sao Paulo's issuer rating at Ba2.

The outlook revision follows a similar outlook revision on the sovereign outlook on Brazil.

Sao Paulo has very close economic and financial linkages with Brazil, Moody's said.

Recent political events seem likely to have undermined the federal government's ability to achieve structural reforms that are needed at the sub-national level for the rebalancing of the fiscal position, the agency said.

But Moody's said it continues to believe the Brazilian states and municipalities will continue to focus on controlling spending and adapting their cost structure.

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