Moody's cuts Brazil credit score

BRAZIL has suffered the ignominy of having its credit rating slashed, only days after the International Monetary Fund threw it a $30bn lifeline.

Credit rating agency Moody's downgraded Brazil's rating for foreign currency bonds by one notch to B2 from B1 and the rating for foreign currency bank deposits to B3 from B2. It said it did so because Brazil's embattled currency, the real, which on Monday plunged more than 4% on foreign exchanges, would increase the burden on the country's dollar borrowers.

Latin America's largest economy is now rated below Bolivia and Bulgaria and is on a par with Honduras-Venezuela and Lebanon.

'Moody's believes the back-loaded and conditional nature of the [IMF] programme leaves a risk that the next administration will face challenges in meeting IMF targets on a sustained basis,' the agency said.

The mounting crisis is blamed on fears that Brazil will default on its $250bn (£163bn) public debt if a leftist candidate wins presidential elections in October.

Billionaire investor George Soros today criticised the IMF bailout, saying it was 'designed to preserve the international financial markets, not the stability of periphery countries'.