Brazil sovereign debt rating cut to junk level

(MENAFN- AFP) Fitch on Wednesday cut its rating on Brazil's sovereign debt to "speculative", better known as "junk", because of the recession and political uncertainty.

The agency's rating for Brazil -- where President Dilma Rousseff is fighting calls for her impeachment -- now stands at "BB+", down from its previous "BBB-" rating, Fitch said in a statement.

Brazil's worse-than-expected recession and increased political uncertainty were both weighing on the country's ability to honour its debts, it said, adding that its outlook for the rating remained negative.

In early September, rating agency Standard and Poor's had already given Brazilian debt junk status.

Rousseff is fighting for her political life as she stands accused of illegal budgeting manoeuvres that she says were long-accepted practices by previous governments.

Political uncertainty is adding to the country's economic woes, with GDP down 4.5 percent in the third quarter year-on-year, and the national currency down a third against the dollar this year.

The International Monetary Fund expects Brazil to remain in recession for the second straight year in 2016 which, if confirmed, would be its first two-year downturn since 1930 and 1931.