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Brazil was upgraded by a notch to BB from BB- by S&P. The upgrade follows the recent approval of a tax reform which S&P believes to be structural and could lead to productivity gains in the long term. According to S&P, the tax reform will help tackle the complexities of Brazil’s fiscal code by clarifying its indirect tax burden and significantly reducing the cost of tax compliance. The reform also adds to an extensive track record of structural and microeconomic reforms since 2016, reflecting an “increasingly pragmatic institutional framework that helps to anchor macroeconomic stability”, in S&P’s opinion. S&P has maintained a stable outlook on the sovereign expecting that it will continue to maintain a strong external position but does anticipate large fiscal deficits.
Brazil’s dollar bonds traded stable with its 6% 2026s at 103 cents on the dollar, yielding 4.6%.