S&P maintains Brazil's investment grade rating.

From Infomoney - The rating agency Standard & Poor's decided to cut Brazil's rating outlook from "stable" to "negative," although it maintained the country's credit rating. S&P expects Brazil to experience a 2% economic contraction this year, while 2016 will see no growth. Only in 2017 does the agency project modest economic growth.

Following the news, the Ibovespa has already plunged 870 points - falling from 49.875 points to 49.004 at 13:40 PM (Brasilia time). Meanwhile, the commercial dollar increased its gains and surged 1,55%, to R$ 3,4163 on the sell side at the same time.

S&P says that ongoing investigations into corruption cases involving high-profile politicians and companies – in both the public and private sectors, and across all parties – have led to increased political uncertainty in the short term. The agency states that this scenario poses a significant risk to the implementation of new policies, particularly in congressional votes.

According to the agency, since the country's rating was reaffirmed on March 23, the risks of a downside to the sovereign rating have increased. "Brazil faces challenging political and economic circumstances, despite what we consider to be a significant policy correction during President Dilma Rousseff's second term," S&P stated in a report.

The agency's projection is one in three that the government will face further "slippages given the political dynamics and that the return to a firmer economic growth trajectory will take longer than expected." "We revised the outlook to negative because, despite the political changes currently underway, which have the president's support, execution risks have increased. In our view, these risks stem from both political and economic fronts," says S&P.