SAO PAULO (Reuters) -Moody's Ratings on Friday changed its outlook on Brazil to stable from positive while affirming its Ba1 ratings, citing "slower-than-expected progress in addressing spending rigidity and building credibility around fiscal policy."
In its report, Moody's, which had upgraded Brazil in October to the Ba1 sovereign rating - one step from investment grade - also attributed the outlook revision to "a pronounced deterioration in debt affordability."
Moody's said that the challenges offset upside investment and GDP growth potential, as well as economic reforms that "are broadly supportive of Brazil's credit quality."
In a statement after the revision, the Brazilian Finance Ministry reaffirmed its commitment to improving fiscal results and continuing the process of structural reforms.
The rating from Moody's is Brazil's highest from the top three credit agencies, with S&P and Fitch considering the nation two notches away from investment grade.
(Reporting by Andre Romani and Patricia Vilas Boas in Sao Paulo, and Bernardo Caram in Brasilia; Editing by Kylie Madry)
